March 27, 2006
Expert Bakers: 50 Percent of Americans Make the Entire Federal Pie
The window for any real tax reform is closing fast. In a general public policy sense, the actions of leaders in a republic should reflect the sentiments of the electorate. Change is only possible when a majority of the country desires it. As such, it is only reasonable to expect leadership to push for the positive reform of a system that a majority of the electorate uses.
As it stands now, the numbers show that a shrinking majority of Americans are actually paying taxes. The tax system is inching dangerously close to becoming fully funded by a minority of the population. The top 50 percent of wage earners pay 96.54 percent of all income taxes.
So what do you say? Let the “rich” top 50 percent pay the taxes, right? Based on 2003 Internal Revenue Service data, the top 50 percent of wage earners included all individuals and jointly filing couples earning $29,019 or more. These are not the people that are stereotypically associated with the word “rich.” However, when politicians talk about how only the rich get tax breaks, these particular taxpayers are included in those sentiments.
Soon, a minority of the nation’s population will be shouldering the entirety of the income tax burden. This is a big problem. A setup where the majority does not pay for entitlement programs (Medicare, Medicaid, Social Security), if left unchecked, will bankrupt the country and not aid in reducing and reforming said programs. The costs of the wars in Iraq and Afghanistan pale in comparison to the funding that goes towards these backwards, broken, and hole-ridden social safety nets.
Politicians and lobbyists complain that the tax cuts do not give enough money back to this country’s poor. Some people will balk at this next statement, but it is empirically sound. There is no way to cut taxes on the lower-income 50 percent of this country when the lower 50 percent do not pay any income taxes!
The danger here is seen in the current leadership. Traditionally, overspending and entitlement program growth have been liberal problems, but now it is spreading to certain Republican leadership. These alleged Republicans have violated their conservative beliefs in favor of incumbent pork barrel spending.
Yet this is not about spending problems; this is about the impossibility of tax reform when a minority of the country foots the entire bill.
The policy arena is currently debating two significant reform concepts that could solve this problem. These soutions are known as the fair tax and the flat tax.
The fair tax is a consumption-based tax. This taxation is not conscripted — that is, consumers choose to pay taxes by the goods they consume. This tax also promotes savings and investment. The fair tax requires that other tax elements be repealed prior to its enactment.
The site www.fairtax.org states three basic requirements for establishment of the fair tax. First, the “passage of legislation that repeals the income tax, the payroll tax in its entirety, the estate tax, the gift tax, the capital gains tax, the alternative minimum tax, the self-employment tax, and the corporate tax.” Next, the “passage of laws that install a single-rate, national sales tax on all new goods and services at the point of final purchase for consumption, and that provides for a universal rebate in an amount equal to the sales tax on essential goods and services up to poverty-level spending.” And finally, the last element is the “adoption of a constitutional amendment to repeal the 16th Amendment and to prohibit income taxes.”
The flat tax is another simplified taxation system. Steve Forbes proposed this plan, calling for deep tax cuts across the board. The plan calls for “not one cent [given] to the IRS on the first $36,000 of income. Anything more than that would be taxed at a flat, fair 17 percent.”
The rationale behind the flat tax is simplicity, elimination of double taxation, and general pro-growth sentiment. It is now common knowledge that cutting taxes leads to higher growth, and in most cases an increase in overall federal tax revenues. While there are inflation dangers when taxes are cut, generally they’ve been successful in stimulating the economy. This line of reasoning carries the bulk of the weight behind the flat tax argument, along with the near elimination of the IRS and curtailment of double taxation.
Positive reform, in any method, should be welcomed by taxpayers. However, as the number of those who actually pay dwindles, the slippery slope where citizens footing the bill currently live continues to erode. Eventually, the need for tax reform will be overshadowed by those living off the teat of the taxpaying public.
The final scenario that ends all hope of true tax reform is as follows: Less than 50 percent of the population pays 99 percent or more of the federal income tax bill. In the event that the majority of people no longer pays taxes, the politicians — who now barely pay attention to the calls for tax reform — will have no incentive to even consider reform. This is the final scenario that ends all hope of true tax reform.
We must avoid this situation at all costs. It will change our capitalist-based system into a socialist system of wealth redistribution. The United States of America must not allow itself to slide so far to the left that the sometimes attractive but continually disproved practices of socialism pervade the nation.
Benjamin Hackett welcomes all replies at (hackett83@yahoo.com) and invites readers to join him at BenjaminHackett.com
Posted by Benjamin Hackett at March 27, 2006 11:59 PMI thought for sure this post would be about the need to raise taxes to begin paying off our debt, but no, that’s apparently not something “conservatives” think about these days. What’s bothering you is that rich people are paying too much taxes and the tax system is too communist. I’m all for simplifying taxation, but common sense tells me that cutting taxes for the rich is not going to solve our problems right now.
Posted by: Max at March 27, 2006 03:54 PMIt always becomes a problem when some people don’t really pay taxes.
That is one thing I find troubling in the Dems posts. Many are for raising taxes - but on someone else, “the rich”. Of course the rich should pay more because they have more, but if it is possible to tax someone else and then get services for yourself, it creates a moral hazard.
A flat tax accomplished the goal of putting everyone in the same boat, rich and poor. Then if you raise or lower taxes, it is clear that everyone has a stake in that.
Posted by: Jack at March 27, 2006 04:06 PMThe top 50 percent of wage earners pay 96.54 percent of all income taxes.
Yep. And why is that so? Because the top 50 percent of wage earners earn 86.01 percent of all income.
If your complaint is that life is unfair, then I think you should be more focused on the fact that the income scale is so out of whack, accounting for the vast majority of the “unfairness” you whine about.
Really, the capitalistic nature of our economy is the primary cause of the number you build your argument around, much more so than the progressiveness of our tax system.
It amazes me how many people see those two numbers (50 and 96.54) on Rush Limbaugh’s web site and can’t take the next step to realize it’s not just because we’re screwing the rich.
Less than 50 percent of the population pays 99 percent or more of the federal income tax bill.
That’s impressive when you said earlier that the top 50% pay 96.54% of the tax. How do you reconcile the numbers?
Posted by: LawnBoy at March 27, 2006 04:11 PMIdidn’t say I was in favor of anything. The above proposal is a tax cut for the rich. It doesn’t collect more taxes, it just taxes the rich less. I’m neither here nor there on the flat tax - I just don’t think now is the time to crying over how much taxes rich people pay. Just as it would be naive to think that our debt can be absolved simply by taxing the rich it’s also naive to believe the extra growth spurred by giving them a tax break is going to solve our problems.
Posted by: Max at March 27, 2006 04:11 PMMax:
You fell right into saying you don’t want a tax break for the rich. Benjamin started out by saying thats the problem—-how people define the “rich”. IF Benjamin is correct, then people making less than 30K are considered in the “rich” class. Kinda changes the outlook of being rich.
Lawnboy:
You mistook Benjamin’s statement: He was presenting a future scenario for taxation when he said “Less than 50 percent of the population pays 99 percent or more of the federal income tax bill.”
The sentence immediately preceding it said this—- “The final scenario that ends all hope of true tax reform is as follows:”. So you can see how he wasn’t claiming that’s the case now, but that if we get to that point, it will eliminate the ability to reform.
Benjamin:
Great article. I kinda like the flat tax idea myself. Cant figure out why many Dems do not seem to like it. Under the flat tax, the “poor” do not pay anything, and the “rich” pay more. Gets rid of all the deductions etc that the “rich” pay their accountants to figure out.
Only thing I don’t like about Forbes idea is that a lot of people won’t pay anything. Even if its a small amount, I like the idea of everyone contributing. Heck, even if we had something where they contributed time in lieu of money, I’d be okay with that. Those who contribute something appreciate what they are given more.
I’m a part of a group that took a bunch of inner city kids to El Salvador to do some work projects. The inner city kids were amazed at how much better off their poverty level is when compared to the El Salvadorans. The kids now have a much better understanding of what “poor” really means.
Posted by: joebagodonuts at March 27, 2006 05:34 PMjoe,
Good point.
Sorry, Benjamin, for jumping too quickly.
Posted by: LawnBoy at March 27, 2006 05:42 PMTo presume the poor aren’t contributing is a false argument.
They contribute cheap labor which the wealthy earn income by exploiting their position in the economy.
Those poor little rich people, oh how my heart bleeds for them. Give me a break. How about a dose of reality?
In a capitalist society, those with capital, are the ones taking everyone else for a ride.Walmart offers no healthcare, why? So the Walton family can be bigger billionaires. Most Insurance companies made a profit { even by their own bizarre definition of profit) inspite of the Hurricanes this year. The are not getting soaked they are soaking society.
Posted by: gergle at March 27, 2006 05:59 PMMax wants to raise taxes, my taxes I suppose. My observation from talking to Dems is they really mean “let’s keep my entitlements”. Okay Max, let’s add a little itty bit of taxes to the lower 50% who pay none, but cut entitlements by a bunch. The latter will really boost the economy and make jobs for the willing and able. Let’s increase entitlements for the truly unable. Most importantly, let’s simplify taxes and thus cut the costs of doing business. Let’s reform health care benefits by changing the methods to personal health share accounts, simplifying that area also and saving even more money to use for growing the econnomy.
Posted by: Edward Morrison at March 27, 2006 05:59 PMThe top 50 percent of wage earners pay 96.54 percent of all income taxes.
Too bad you couldn’t provide an “apples-to-apples” comparison with this statement, i.e. “The people who earn 50% of all wages pay 96.54% of taxes.”
What your statement says to me is that “Of all the earners of wages, 50% of that number pay 96.54% of all income taxes. Suppose there are 50,000,000 wage earners in the US (i.e. they earn money that is reported to the IRS) your statement is that 25,000,000 of the top wage earners pay 96.54% of taxes.” I don’t find that particularly surprising , upsetting or unfair.
Keep in mind that below a certain amount of income, no wage earner pays income tax.
I know it offends conservative sensibilities to say so but even if all the 50% lowest wage earners paid exactly the same percentage of tax as did all the top 50% of wage earners, the top 50% of wage earners would still pay a disproportionate percentage of total taxes paid, for the simple reason that 10% of $50,000,000 is a heckuvalot more than 10% of $5000.
The real problem with the flat tax (but the so-called “fair” tax as well) is that, contrary to commonly mistaken belief, people who don’t pay income tax most certainly do pay taxes.
First, there are the social security and medicare taxes (I know those aren’t the right names) that they pay pretty much on every cent they earn. Then there are the local and state sales taxes that, again, they most likely pay on every cent they make. None of these taxes were cut and in fact, in some cases, state and local taxes increased to make up for tax revenues states and cities lost when federal taxes were cut.
So if anyone tries to tell you that people earning less than some amount of money pay no taxes, they’re lying or trying to blow smoke. It’s not true.
The main problem with consumption taxes is that people in lower earning brackets inevitably wind up spending a larger percentage of income. Example, compare someone making $10,000 per year who spends all of that on consumption with someone who makes $10,000,000 and spends $30,000 on consumption. At a 17% tax rate on consumption, the first guy is taxed at a rate of 17% (i.e. 17% of $10,000) on his total income, while the second guy is taxed at a rate of .051% (i.e. 17%*30,000/10,000,000) on his total income.
Don’t tell me you call that fair.
Posted by: wanna_be_jack at March 27, 2006 06:11 PMjoebagodonuts:
Great article. I kinda like the flat tax idea myself. Cant figure out why many Dems do not seem to like it. Under the flat tax, the €œpoor€ do not pay anything, and the €œrich€ pay more. Gets rid of all the deductions etc that the €œrich€ pay their accountants to figure out.
No, under a flat tax, everybody pays the same percentage including the poor. What you’re calling a flat tax is what is usually referred to as a fair tax, in which everyone, including the rich get to deduct some amount of money considered to be minimal to survive, say $5000. In that case, it is true that those earning less than $5000 would pay nothing.
In either case, the problem with consumption taxes in general is that it will result in contraction in demand in our economy, which will result in falling proces, which will result in a recession or possibly depression. If you think about it, our economy is pretty dependent on people consuming things.
Posted by: wanna_be_jack at March 27, 2006 06:24 PMGreater shares of the nation’s income naturally carry with them greater shares of the nation’s income taxes. If the top earners really wanted to shoulder less of that burden, they could do what they were supposed to do all along, and pay their employees more, shifting more of the tax burden to the lower classes.
It could also, while we’re at it, shift more income into the hands of those who would spend it more, relieve our economy of some of consumer spending’s reliance on debt financing, and in the meantime lessen tensions between between the different classes.
I’m sure we’re all familiar with the statistics that show that over the last thirty years, executive salaries have skyrocketed more than ten times, where worker’s salaries have increased only by 75 percent. I’m sure we’re familiar with plenty of cases where executives, even those who have been a burden to their companies, have garnered huge amounts of compensation, even while employees jobs, salaries, and benefits have been considered expendable.
So long as forces keep on encouraging the upward mobility of wealth into the hands of the few, there will be, of course, the upward mobility of the tax burden.
So, excuse me while I don’t weep for those top fifty percent of wage earners. It’s a mark of shame that folks who are given the vast majority of our wealth can be so loud in their complaints of having to lose a little more of it to the taxman. Excuse me, if I think that the Republican party’s idea of tax reform is just plain elitist in its assumptions.
Posted by: Stephen Daugherty at March 27, 2006 06:29 PMIt’s elitist when we’re talking about those making as little as $29,700 a year/ household? Seems you went in for a little hyperbole.
Also, this one mystified me, “they could do what they were supposed to do all along, and pay their employees more.”
Did I miss a class somewhere? Are owners now supposed to pay workers more because the can and not because they have to to keep up with the market? Now that I understand this I have a few other places where I want to apply it. I think owners should have to pay more for computers, because I own stock in Dell. An oh for office supplies too, that OfficeDepot stock sure could use a boost. Oh, and I think they should have to put on free U2 concerts in the park, so I don’t have to pay for them anymore. Can you get that arranged?
I know you were using 5,000 as a hypothetical wanna_be_jack, but the cost of living most places in America (especially if you want to go to a good college or are living in a city) is much more than that. Progressive taxes arent unfair, because everyone who prospers in this country does so under the auspices of our political system. Our security (military, police, fire department, etc), the long term stability of our economy (education), and many other aspects of government intervention in daily life are part of the situation that allows people to succeede. If someone is extremely well off, they can contribute more, whereas if someone is struggling (living off of less than 30,000 a year certainly isn’t comfortable) they cannot afford to give as large a percentage.
If you introduced a flat tax tomorrow, it would most likely be a major cut in the already completely bankrupt federal budget. The fact of the matter is, the bottom 50% don’t posses enough wealth to make up for current budget discrepancies.
We can’t make up for the deficits by cutting social programs, we need to go after the inflated military budget and corporate welfare, and work on a way to reform social security that won’t cost us several trillion dollars up front (the way that private accounts as suggested by president bush would). We also need to figure out how to handle healthcare in this country, because as it stands the cost is completely overinflated. We could get rid of medicaide and medicare, but I don’t think those are popular choices, so we either keep the expensive plan that we are using now, or come up with something new, something not written by those who benifit most from the legislation.
This is indeed a crossroads, and if we don’t solve our budget problems now, in the years to come our budget will be consumed by interest payments, we will be borrowing more and more just to pay off what we already borrowed, and there will be a point when foreign captial strays away from US investments, and foreign nations start to trade in Euros instead of dollars, what will we do when our debt is so large we cannot hope to pay it off with interest on an infinate timeline? If we were actually cutting deficits, I might have hope to see surpluses in the years to come, but instead the deficit goes up every year.
Clearly neither party has the responsibility to be in charge of our nations finances.
Posted by: iandanger at March 27, 2006 06:50 PMTaxation is a priviledge in a democracy. It is the opportunity for all to contribute to a cohesive society. It seems to me that those who shout loudest for tax reductions, are those who neeed them least. It is nauseating to witness the greed of those who, whether by their own hard work or otherwise, having accululated wealth, seek to hoard everything, which they have acquired by virtue of the freedoms such a society confers.
I have heard in the august columns of this blog site people argue that if others were not so feckless, they could have lives filled with opportunity and affluence too. It is as if it is a moral weakness in people that they do not achieve even modest financial security. No account is taken for variations in talent, intelligence, confidence, chance, inspirational influences or their opposites. It seems to be; ” if I could haul my ass off the ground, then so should you” Some of us get a considerable head start in life. To those that have been given much, much is expected.
A civilised society is a cohesive society, where there is considerable investment in raising all boats. This is not an argument for limitless welfare, but intelligent welfare, to somewhat even the odds and to help those who are weaker to try to stand tall too. Margaret Thather once said that there is no such thing as society. If these kinds of attitudes are allowed to prevail, there it is the end of society, and the emergence of a literal rat race, where no one cares about anyone else. As we say in Ireland, everyone for himself, and the devil take the hindmost. Is this the culture Americans see themselves defined by?
Posted by: Paul in Euroland at March 27, 2006 06:55 PMOh, and I think they should have to put on free U2 concerts in the park, so I don€™t have to pay for them anymore. Can you get that arranged?
Posted by: Rob at March 27, 2006 06:44 PM
Hey Rob, they’ve done a few freebies in Dublin. Next one comes up, I’ll arrange for a place for you, all you’ll need is the flight tickets and accomodation and spends. K?
Posted by: Paul in Euroland at March 27, 2006 06:58 PMjust ask yourself this question if your rich or poor does a hundred dollar bill go as far today? a ceo makes ten times more today than 1980 as opposed to the worker who makes 1.7 times more?
Posted by: JAY at March 27, 2006 07:07 PMI suspect if you analyse the raw data on who pays what, you’ll find that the vast majority of that 50% who pay tax pay the vast majority of tax (percentage wise). Commonly, the wealthiest pay the smallest percentage. In fact, in my own counrty in recent years, revenue stats show that some of our wealthiest people paid no income tax at all! I suspect the US is not altogether unlike that situation.
Posted by: Paul in Euroland at March 27, 2006 07:14 PMiandanger:
I know you were using 5,000 as a hypothetical wanna_be_jack, but the cost of living most places in America (especially if you want to go to a good college or are living in a city) is much more than that.
Right, I didn’t mean to imply that you could live on that amount of money. But to your point, I don’t think that whatever “deduction” or whatever you want to call it would cover the price of living in every location in the country or, for that matter, the price of earning a college degree. The deduction per person would be the bare minimum survival consumption amount, averaged over the entire country, and I mean not assuming you would own a car or a house or that you could dine out on it at all.
Progressive taxes arent unfair, because everyone who prospers in this country does so under the auspices of our political system.
I couldn’t possibly agree with you more, exactly for the reason that the people on the bottom rungs of the economic ladder cannot and do not partake of economic prosperity to the extent that richer people can and do. Why? Because people on the lower rungs are not represented in the legislative branches the way rich people are.
How does anyone figure, given the example I listed above that it’s at all fair for a poor person to pay 17% of their annual income under a consumption tax scheme while a Jeff Skilling or a Ken Lay would pay .051%? How’s that fair? If you guys that think this regressive consumption tax is momre fair than the progressive tax scheme we now have, put your own number out here and explain why a flat or fair tax is more fair.
Posted by: wanna_be_jack at March 27, 2006 07:30 PMMax:
I thought for sure this post would be about the need to raise taxes to begin paying off our debt, but no, that€™s apparently not something €œconservatives€ think about these days.
LOL. Dick “Deadeye” Cheney says deficits don’t matter. If anyone on here agrees, explain why we have to pay taxes at all.
Posted by: wanna_be_jack at March 27, 2006 07:32 PMA 17% Flat Income Tax Rate plan (details) must:
[] have a poverty level exemption (e.g. N times the poverty level, where N > 1.0)
[] must eliminate all deductions and tax loop holes.
[] require no taxes paid, until income exceeds the low income level exemption.
EXAMPLE:
Given:
(1) a flat income tax of 17% ,
(2) and a poverty level of $12K ,
(3) and an N factor of 1.5
(4) therefore, low-income-exemption-level is 1.5 x $12K = $18K
(5) and five persons with different gross incomes:
A earned $15,000 per year.
B earned $50,000 per year.
C earned $90,000 per year.
D earned $200,000 per year.
E earned $900,000 per year.
F earned $9,000,000 per year.
Therefore, the income tax for each person (after subtracting the $18K exemption) is:
A tax = $0 since $15K is less than $18K; that is 0% of $15K ;
B tax = $5,440=0.17 x ($50K-$18K); that is 10.9% of $50K ; and 17% of $32K
C tax = $12,240=0.17 x ($90K-$18K); that is 13.6% of $90K ; and 17% of $72K
D tax = $30,940=0.17 x ($200K-$18K); that is 15.5% of $200K ; and 17% of $182K
E tax = $149,940=0.17 x ($900K-$18K); that is 16.7% of $900K ; and 17% of $882K
F tax = $1,526,940=0.17 x ($9,000K-$18K); that is 16.97% of $9,000K ; and 17% of $9,982K
It would be nice if it could be lower than 17%, but the current debt and many previous decades of fiscal irresponsibility won’t allow it.
That is a linear tax scale (income versus tax), which is most fair, avoids the common argument that plague the graduated (progressive) tax systems as being unfair by taxing higher income at increasingly higher tax rate percentages, and does does not punish the poor, due to the low-income-exemption-level exemption. Everyone pays the same 17% on all income above the low-income-exemption-level.
d.a.n.:
A 17% Flat Income Tax Rate plan (details)
Good work Dan, thanks for the info. Just one question though: where do you figure that the 17% rate is adequate to at least balance the budget and preferably reduce the deficit?
I was thinking I had seen something like this that showed you needed more like a 25% “flat” (I prefer to call it fair, since it exempts a minimum proverty level income) rate to balance the budget.
I think it was Ben who kicked this whole thing off by saying this wasn’t a spending problem but rather a taxation problem. I couldn’t disagree more: if it weren’t for all the spending on cockamamie programs that should never have gotten started in the first place, nobody’s taxes would have gotten high enough to be objectionable.
Posted by: wanna_be_jack at March 27, 2006 07:45 PM“if it weren€™t for all the spending on cockamamie programs that should never have gotten started in the first place, nobody€™s taxes would have gotten high enough to be objectionable.”
Exactly, if people had the full info on how much contractors bilk the government for then there would be a lot less support for spending so much of our budget on military needs. Just look at Sattelite Missle Defense: Abject failure.
Posted by: iandanger at March 27, 2006 07:51 PMd.a.n. i would sign on except i would reduce b to 11% and c to 12.5% and d to 15.5% if possible.
Posted by: RODNEY BROWN at March 27, 2006 07:58 PMwanna_be_jack,
You are right. The problem is not just a problem of taxation. It is also a result of many decades of fiscal irresponsibility, corrupt government, and voters that tolerate it.
The 17% Flat Rate Income Tax Plan was arrived at by dividing the total current federal tax revenues (about $2 trillion in 2004) by the U.S. GDP (about $11 trillion in 2004), and subtracting 1% (i.e. 18% - 1% = 17%). The federal government should be able to reduce spending by 5.6% which accounts for that 1% reduction for the 17% Flat Income Tax Percentage Rate.
It would be nice if it could be lower, but the pass several decades of fiscal irresponsibility, and the $8.3 trillion National Debt make it impossible.
[] National Debt has never been larger. In 1950 dollars, debt now is quadruple what it was afer WWII (adjusted for inflation). True, there’s been growth in GDP too, but …
[] %Debt to GDP (now 68%, up from 33% in 1980) has never been worse since WWII.
[] Deficits have never been larger, and $200 to $400 billion deficits (in 2006 dollars) are planned to continue for years.
[] The gap between the wealthiest 1% and the rest of the U.S. population hasn’t been larger since the Great Depression of 1929.
Rodney Brown wrote: d.a.n. i would sign on except i would reduce b to 11% and c to 12.5% and d to 15.5% if possible.
Rodney Brown,
Those percentages in (a),…,(d) are just the fallout of the low-income-level exemption.
The three controlling factors are:
(1) the 17% Flat Income Tax Rate Percentange,
(2) and the low-income-level multiplier, N, which must be greater or equal to 1.0
(3) the poverty level income (which may vary by state).
Also, lowering or increasing (a),…,(d) would mean some people pay more or less (i.e. different tax rates). I’ve been a long-time proponent of a Flat Income Tax Rate because it is fair. Not because it is simple. Some would prefer a more progressive tax, that taxes the wealthy at higher tax rates, but I’ve always contended that 17% of $50K is twice as much as 17% of $100K . That is progressive enough.
Of course, Tax Reform, and all other reforms will never happen until voters do the one simple, common-sense, no-brainer, safe, non-partisan, peaceful, and responsible thing they were supposed to be doing all along:
Posted by: d.a.n at March 27, 2006 08:32 PM
Vote out (or recall) all irresponsible incumbents, always, every election, until no more irresponsible incumbents exist, and government finally agrees to pass the many badly-needed, common-sense, responsible reforms that incumbents have refused to pass for so many decades.
The problem with all the above plans is that nobody talks about spending. Before any revision in taxing is to be done, it should be required to reduce spending. Now there is where a lot of positive things could be done. For instance abolish the Dept of Education, HUD, OSHA, FEMA, Agriculture, and you get the drift. The departments that are not to be central government departments should be dropped and let each handle the associated situations. This would save the taxpayer billions of dollars a year. The next step is to make “pork” or earmark spending illegal. More billions saved. When those savings are applied to the national debt and when the national debt is reduced to an acceptable level then revision in tax code could be approached. But spending must be extremely reduced first.
Posted by: tomh at March 27, 2006 08:38 PMYes, let’s not forget that income tax is only a part of the tax picture. Sales tax, property taxes, licensing taxes, etc. are all born by lower income folks as well, and as a proportion of their income, these taxes hit the the less well off much, much harder than the wealthy.
I am with Jack, here. The flat tax is the only system for income tax that will be perceived by most as being fair. Same rate for all, save the poorest who pay none. Can’t get blood from a turnip, so arguments against the poor not paying are moot! The flat tax will have ripple effects on the economy, not all of which will be positive in the short term. But, in the long run, a flat tax system will cost less to administer, cost less to accomodate, will give our government greater predictability over future revenues, and be perceived as the fairest system possible.
Posted by: David R. Remer at March 27, 2006 08:40 PMGood post Benjamin; I don’t necessarily like the fact that some people wouldn’t pay any taxes under the flat tax plan, but it’s certainly better than what we have now. Progressive tax is just another name for redistribution of wealth (i.e.- socialism). Everybody in this country benefits from living here so everybody should have to contribute in some way or another. Some have argued that the poor contribute in the form of cheap labor so it’s okay that they don’t pay any taxes. The same arguement could be used to say that the rich contribute in the form of economic investment and also own businesses that supply jobs to the working person. Again, we’re brought back to square one: why do we pay taxes and who should have to contribute? (a rhetorical question)
I’m tired of hearing the “life isn’t fair” card being played in this regard. You’re right; life isn’t fair. Some people are more intelligent than others. Some people were born into wealth. Some people just seem to know how to make money while others don’t. Some people are born into bad situations. I could go on, but hopefully everyone gets the point that life will never be fair. It’s not the government’s responsibility to make it fair. The government’s only responsibility is to ensure your rights as a citizen of this country. That’s it. It’s not the government’s responsibility to see that you have a job, a house, a car, or whatever; the government just protects your right to get those things if you want to. The problem with the taxation system as we have it now is that it makes the government the source of the injustice itself.
Posted by: Tyler at March 27, 2006 09:17 PMiandanger,
There is a simple solution to the Social Security problem, but try selling it to Congress.
Realize that the United States of America is paying close to 20% interest on our national debt.
Realize that Congress has placed the Social Security Trust Fund into the general budget and use it freely.
To solve the Social Security shortfall in the out years, all Congress needs do is start paying the same interest on Social Security monies as it does on borrowed foreign monies. Don’t you think Social Security is worth at least as much as Communist China?
Posted by: Marysdude at March 27, 2006 09:21 PMTyler,
You are right. Everyone should be taxed the same, there should be no entitlement programs, such as WIC or welfare.
But, if everyone did pay taxes, the amounts collected from the poorest amoung us would be so little that the relief felt by the more well off would be so little they’d not even feel it…but, the poor would feel it.
Posted by: Marysdude at March 27, 2006 09:27 PMMarysdude,
Thank god, someone else who understands!
The problem is that our government just plain isnt trustworth when it comes to money. Social security is paid for full up for a long time now, so the rest of the money is treated like a slush fund. Social security is actually regressive to a certain extent because there is a cap on income that is taxable by social security, but the program gives better benifits to people who make less, so this isn’t entirely unfair.
Anyways, talk about social security reform is pure politics when private accounts come up. The president says that everyone currently getting benefits will continue to recieve them, but if you run those numbers, that means we have to start putting the money that is paid into social security in private accounts and borrow the money to pay for the current recipients.
Posted by: iandanger at March 27, 2006 09:39 PMtomh. that would help but the real problems are the major entitlements according to stuart butler phd. butler writes without entitlement reform a balanced budget would require taxes to rise about 15% in 10 years and 30% in 20 years.! i like the flat tax idea in theory everyone pays the same. i have some issues on the principles
Posted by: RODNEY BROWN at March 27, 2006 09:54 PMTyler, Marysdude,
I agree completely.
No tax system will be loved, but the most fair system will result in the least abuse. The system we have now is severely abused, and costly too, due to the ridiculous complexity.
Why do we pay taxes and who should have to contribute? (a rhetorical question)Good question. In the beginning, federal taxes were primarily only to pay for the national defense. But, it has now mushroomed to nightmare proporations . Spending cuts are needed. And, the size of government must be reduced too. There are now more jobs in government than all manufacturing. Are we getting our money’s worth ($2.2 trillion)? Not even close. Not when it is so severely bloated, wasteful, and ineffectual.
Still, we need some taxes for the national defense, the truly needy, to make and enforce the laws.
Unfortunately, the other fifty gazillion things the federal government meddles in, should not be a function of government. Take Social Security and Medicare for instance. These have been severely mismanaged, and are facing the consequences of decades of dysfunction, and corruption.
At any rate, we should all contribute, if able. Obviously, the poor can’t. That is the reason for a proposed low-level-income exeption that is N times the poverty level (where N is always greater or equal to 1.0). And, nobody would pay any tax, as of 1-January, until their income exceeded N times the poverty level, and then, only income above that amount is taxed. After that, everyone would pay the same 17% Flat Rate Tax Plan.
Rodney,
Social security is paid for by itself, and frankly speaking, you’d be hard pressed to find any support for eliminating the program. Private accounts would cost something like 3 trillion dollars in debt just to get started, and with social security money going directly into private acounts, that would mean less money going to the federal government.
There are changes that need to be made in medicare, and the president’s program didnt even remotely help that, since it was basically a buyout.
Just saying get rid of entitlements doesnt solve anything, because most of those programs are there for a reason.
Posted by: iandanger at March 27, 2006 10:32 PMThis has been most informative. Not being the brightest bulb on the string it’s nice to see some of this stuff explained in plain English. I’m not qualified to comment on this subject, but I would say, in general, that the Constitution clearly lists the functions of the federal government. And they are few. But over the years, Congress and the Supreme Court has rewritten that document to suit their political purposes. But, we can’t blame them. We the people have let them get away with it.
Posted by: Bill M. at March 27, 2006 10:34 PMBut, we can€™t blame them. We the people have let them get away with it.
Well Bill M. , in my opinion, what you just said makes you smarter than most people.
Yes, we can’t blame only the corrupt, bought-and-paid-for incumbent politicians. They deserve about 51% of the blame.
The remaining 49% belongs to the voters that allow it.
Posted by: d.a.n at March 27, 2006 10:44 PMIt might be useful to note that the world economy has made a macro-economic shift the past 20 years. Other scholars have discussed the “distributional consequences of a knowledge-based economy with respect to growing inequality in wages and high-quality jobs”.
The world is on a global scale and talent of any kind is rewarded disproportionately. Athletes, movie stars, and CEO’s make what some would consider egregious amounts of earnings.
Tom Hanks is paid $25 million per movie, and Tiger Woods makes over $30 million annually from endorsements. What is interesting is that you don’t see people screaming that Tiger Woods and Tom Hanks don’t deserve their money. However, people in business paid comparable wages are considered to have earned their wages at the expense of the “working class”.
In my opinion I believe the income inequality gap will continue to increase and an ever smaller minority will support social programs and retirement for the majority. This will result in an inevitable shift towards socialism. It will be an easy political message to send, “it’s not your fault since you’re being exploited - let us help you by taxing the rich”.
I just hope I pass away before we become like France.
Posted by: RobD at March 27, 2006 11:03 PMlandanger hold on there i dont think i said getting rid of the entitlemints and i dont care for private accounts. but there is a big problem that only gets bigger in later years there’s not enough money to sustain the entitlemints at current and future years ahead . anyways the problem needs to be addressed before it is to late.btw social security has been a great sucess for millions of people and hopefully it will be in the future. hope that clears up my position
Posted by: RODNEY BROWN at March 27, 2006 11:04 PMSome random thought in no particular order.
The sliding of the tax burden from the investor class to the wage-paying class hasn’t been discussed. I think it’s a problem.
A flat tax is very regressive—and if Steve Forbes thinks it’s a good idea, thats enough for me to back away from it. I am not shy in advocating socialism—I believe in the commons, and believe in a system that protects even the least of us, instead of a ruthless obesession for money which amounts to undermining democracy and individual liberty.
The upper classe folks that are not very bright pay, what, %35 tax now? With all the tax shelters, on-shore and off-shore, that would indeed be stupid—and most rich folks aren’t stupid. A flat-tax of %17 halves their taxes. They’ve had enough tax breaks for this century.
Want to go a long way towards solving the SS insolvency problem? Eliminate the $90,000 ceiling on SS taxes—make it 150k, or take it off completely.
I am not adverse to a progressive tax structure. I’m a socialist.
Posted by: Tim Crow at March 27, 2006 11:05 PMTom Crow,
Few pay 35% due to hundreds of deductions and tax loop holes.
If the wealthy pay 17% and the tax loop holes are eliminated, they will pay more taxes.
Also, cuts in spending are needed to.
Also, before you totally discount the 17% Flat Income Tax Plan (with a low-income-level exemption), be sure to scrutinize the details. It is very fair. But, if you believe many people paying 35% is OK while many others only pay 17%, then we can agree to disagree. The system I proposed is not regressive. It is simply fair. 17% of $50K is twice that of 17% of $100K. What’s regressive about that? It’s simply not Progressive.
Now, about the Social Security caps, I agree. Get rid of them. Those hammer the middle class, and let the wealthy pay little (compared to total income). See the bottom of the page of the of the link I provided above. It contains a major change to Social Security.
Posted by: d.a.n at March 27, 2006 11:24 PMrobd the difference between tom hanks and tiger is the public supports it hollywood is a business also they have a bottom line. also fact is his movies make a big amount of money his films to date have grossed 3.7 billion dollars to date thats 36 films to date. one of the highest money makers for the studios ever. btw that is not counting pay per view, or rentals or sales of dvd or vcr tapes. how many ceo,s have that kind of resume’s?
Posted by: robd at March 27, 2006 11:44 PM“If the wealthy pay 17% and the tax loop holes are eliminated, they will pay more taxes.”
And if we can only give the top %5 a few more tax cuts, and make the ones that are already in place permanent, then investors will invest, jobs will be created out the wazzoo all of them having good solid wages and benefits, and all this corporate largess that isn’t being invested will be, increased productivity will raise tax revenue, (just like what’s happened in the last five years under Republican custodianship), and we will all live happily ever after—until the Asians blow the whistle and dump the dollar for Euros.
Posted by: Tim Crow at March 28, 2006 12:19 AMd.a.n. your restructure plan of social security seems like it would cut the masses the middle class down. and what if some folks had a california address but really lived in arkansas they find a way! and the wealthy they cap out in three to six months ? and why does someone who makes $350,000 a year need to collect social security anyways?
Posted by: RODNEY BROWN at March 28, 2006 12:21 AM“Also, before you totally discount the 17% Flat Income Tax Plan (with a low-income-level exemption), be sure to scrutinize the details. It is very fair.”
When has anything that this government has done economically been about ‘fair’?
Posted by: Tim Crow at March 28, 2006 12:22 AMRodney Brown,
In the plan presented to reform taxation and Social Security, everyone would only receive from it as follows:
_________________________________
Social Security and Medicare:
[] Every individual, when eligible, receives the same benefits: I times times the poverty level;
[] I is a multiplier determined by the government, that is never less than 1.0 ;
[] the poverty level for 1 person will be determined by a government agency, will be recalculated annually, and may vary by state;
[] It does not matter if some pay more or less in a life-time; the purpose of Social Security and Medicare should not simply be to hold your money and then give it back later. The purpose is to provide the minimum required to survive on. Any civilized society should be willing to do that much. Otherwise, we are not civilized, and it is simply everyone for themselves, which could lead to anarchy, chaos, war, and survival of the strongest. Also, people that have nothing to lose, and no way to improve their lot in life, can become dangerous to society. No one is an island. The benefits of a lawful, peaceful society are not free. It is a small price to pay if it truly benefits society.
__________________________________________
As for, why should someone making $350K even receive benefits? Because everyone should receive equal benefits (e.g. I times times the poverty level; where I is a multiplier determined by the government, that is never less than 1.0 )
We should not punish people just because they are wealthy. That’s what a progressive tax scale does. But, our tax system is so perverted, with so many tax loop holes, the system is dysfunctional, and the wealthy, in many cases, are paying a smaller percentage of income to taxes than most people.
So, the rich get richer, and the poor get poorer, as evidenced by the data (see below):
d.a.n. thanks. can you provide any info or charts as who is collecting social security like a pie ie retired people. disabled people. children of the disabled. students ect. ect. all of the above? thank you.
Posted by: RODNEY BROWN at March 28, 2006 02:06 AMI just hope I pass away before we become like France.
Posted by: RobD at March 27, 2006 11:03 PM
RobD, I wonder if you have ever been to France and spent any amount of time there? Enjoyed the food, the culture, the landscape, the language, the “ambiance”, the general standard of living? The first rate public services - buses - trains - metros - roads - comms - Healthcare - the list goes on and on. Does France have problems? Is there any country out there that does not?
It seems to me that there is much uninformed comment regarding both France and Germany from people in the US. Neither France nor Germany have perfect societies - but nor does the US. What they do have is far greater dignity for the average “Joe or Jane”, anda less of the squalor of poverty than the US. And they still have world beating companies that trade on the world stage with the best. This issue of taxation is really about the American dream, where anyone can make it big, except the fact is, that the vast majority don’t, the majority in fact is probably the struggling middle classes whose standard of living and life expectation continues to decline, while the rich get much, MUCH richer. The US has created many myths about itself, many of which are positive and constructive for the country. But the American dream is more like a fantasy for the vast majority, which keeps them from really questioning why the balance is very much in favour of the already wealthy.
Posted by: Paul in Euroland at March 28, 2006 03:52 AMThe trick in any income tax scheme isn’t whether it’s flat, progressive or regressive. It’s what you define as income. What is a capital gain? What is depreciation? There’s a entire industry around this issue with lobbyists on K street. The facist tendencies of corperatism is a whole economic looking glass as well.
To me, these are the real issues of taxation and a large source of the economic disparities of the rich and poor.
Tyler, I agree that a free market should set wages not the good will of the owners. Who competes freely with Walmart? Or do they dominate a market and thereby monopolize it?
I have no problem with Sam Walton becoming wealthy by increasing efficiency through using technology to control their stock. I have a problem with the market being driven to the lowest common denominator through market monopolization.
Posted by: gergle at March 28, 2006 05:01 AMso, the “bottom 50% of tax filers are too poor to pay (income) taxes in this country and everyone is up in arms about the unfairness of the system. what B.S. The poor have always paid a disproportionate share of all applied taxes,including local, state, and federal taxes. take some time to add up all the taxes paid some time and divide that into your income. At the 20,000 dollar range it will come out to about 46% of income, at 60,000 it is only 37% and then quickly begins to drop. Add to that regressive and predatory pricing practices by the finance, retail, and other service industries, and the “poor” end up carrying the economy on their backs. This “oh how unfair it is” whine seems to come up in full force every March, and it is sickening. Y’all need to find someone else to pick on about tax payment inequities as the poor don’t even have time to sit and argue the point with you. they are too busy tring to make a living, (and pay their tax billS) to sit around and debate the finer points of monetary policy and tax reform.
Posted by: synecdoche at March 28, 2006 05:08 AMA flat tax accomplished the goal of putting everyone in the same boat, rich and poor.
You conveniently ignore the fact that the poor don’t have the money to pay taxes.
Posted by: bobo at March 28, 2006 07:39 AMRob-
Why stop with 50/50? Try 75/25! Claim that the rich are carrying the rest of us on their backs.
This is Ayn Rand philosophy, where people expect the world to be fair for them, even if they do their best to make it unfair for others.
Selfishness with wealth is bad form. A great number of people likely contributed that wealth to you, willingly or unwillingly. They usually ask of you is that you do properly the things they pay you to do for them. They also ask that you provide them with the most economical prices for what you do. That isn’t strictly about price, because you can have a cheap good or service that brings little value to things. What we want is a concentration of value at a certain price.
We expect those who are rich and those trying to get that way to initiate, invest in, and lead projects and companies that will use the skills and resources of the rest of us to good effect.
All in all, we already expect a great deal of these people, a great deal they don’t always live up to. We have a mildly progressive system here, one that allows the rich to have the bottom hundred thousand they earn at our rates, and then the rest at a rate that doesn’t even break 40%.
Heavens, they have it tough in this socialist paradise, don’t they!
Fact is, you raises taxes on a rich person, it won’t hurt them as much, since most of their income is just icing on the cake anyways. What’s more, if that money goes to reducing the deficit, then it comes back around and stays in American pockets, instead of going abroad and funding our competition.
Rich people have something to gain by allowing themselves to be imposed upon a little bit more. It’s unsightly that they (or their apologists) complain so much about their light burden when for others the tax bill takes a major chunk of change they could actually use.
It’s real funny to say we punish the wealthy for getting wealthier. Really, I guess those people look at the taxes and say, “Gee, I don’t want to earn anymore than I already do. I might get taxed.”
If its that unexpected for them, I think their likely response will be to get motivated to make more money. Punished? Disappointed is the strongest term I would apply. But if you’re disappointed at what you make after you break into the upper brackets, you need more perspective.
Posted by: Stephen Daugherty at March 28, 2006 07:50 AMI think there is another critical issue to be discussed here, and that is voting. If the non-tax payers side with one party and they become the majority, the taxpayers as a minority group will be discriminated against.
Posted by: Cliff at March 28, 2006 08:34 AMWrong, wrong, wrong. Rich people are not paying the majority of taxes. Why are you only looking at Federal Income tax revenue when it is obvious that is not paying for our government.
Include all taxes: social security, state income, state and local sales, real estate, excise taxes, etc. If you add all of those taxes up, you will get a very different picture. Realize in some states your only tax of any consequence is sales tax and we know already that the poor and middle class pay the majority of sales tax.
The Great Myth: Republicans reduce taxes. Since the Reagan years taxes have climbed steadily for the poor and middle class. Social Security tax doubled from 1980 to 2000 (thanks to our brilliant Alan Greenspan). Real Estate taxes in the last five years have risen on an average by 20%!. And don’t forget all those lovely taxes on your phone, cell, and utility bill.
Only the super rich have seen taxes go down. And I am not including families making $150k to $250K. Most of the super rich are seeing tax rates 15% and under. Wouldn’t all of us like to see our taxes at 15% - but someone has to pay for the government.
Flat Tax on Corporate America. If you want to try out a flat tax, do it on corporate America, say a flat 15% tax on all cash flow (forget about reported earnings, that’s is so fudged). Put Exxon on the same footing as Microsoft and stop favoring one industry over the other. Now that is capitalism. Instead we have a social welfare state, not for the people, but for the oil, gas, mining and chemical industry. Be a true conservative and stop these subsidies to old smoke stack industries.
Posted by: Acetracy at March 28, 2006 08:46 AMStephen,
I don’t have a problem with a progressive tax structure per se. What I do have a problem with is that we continue to discuss this with no real numbers or any sort of reality check.
You continue to talk about the “rich” as if they are some kind of beast that has a scientific classification and a spot in the zoo when in reality, there is a sliding scale that gets you there. So answer me this, who’s rich? I think we can all agree that $29,700/year is not. So where does it start? $100,000/year; $1,000,000/year, somewhere in between. Why we’re at it, what’s poor? Is it the official poverty line (last I checked somewhere around $12,600 for a single person). Twice that, three times that? Is a family with 3 kids poor at $60K? $40K?
Without definitions, we continue to talk past each other. Most people in America think they are in the middle class. Something like 85%. A little Lake Wobegonian for sure. Until we put some numbers on paper that most of us can agree on. The taxation argument is going to continue to devolve to flat taxes because they are infinitely easier to understand and appear on the face more fair.
Posted by: Rob at March 28, 2006 09:26 AMAce
I just filed my taxes. The program added up all the taxes I paid (state, local etc as well as Fed). I paid about 25% of my total income in taxes. I am not that rich and that 25% would not pay for much. In fact, even if the government took ALL my money, it would not pay for much.
That is why it is clear that the lower half of the population does not pay most of the taxes or even very much of them.
The poor are not being soaked by taxes. In fact, the lower half of the population sees a net gain from taxes.
We can talk about the general justice of the system, but you just can’t use the argument that the poor are paying for the government.
Re sales tax, if the poor and the middle class (depends on where you draw the line) are paying most of the sales tax, that would also mean that they are consuming most of the goods and services. If that is true, what does it mean to be poor?
Posted by: Jack at March 28, 2006 09:30 AM“Expert Bakers: 50 Percent of Americans Make the Entire Federal Pie”
Nothing says freedom like forcing others to support your personal beliefs.
Posted by: kctim at March 28, 2006 09:36 AMI just love how some people think that we should be taxed based on how much we make. What principle is that based on? Yes, I realize that some are just barely scaping by and Marysdude and others have already intelligently addressed that issue; with the flat tax, it allows for those scraping by to avoid paying income tax. Yes, I realize that there are other taxes the poor have to pay like property taxes. Someone on this blog said that the poor pay more than the rich in that respect, but that doesn’t make much sense to me because obviously the rich have more property and therefore pay more tax. Oh yes, the poor do pay a higher percentage of their income to living expenses. Is that a surprise to anyone? Of course they do! Why else do people want to make more money? The rich don’t have to struggle in that regard and that’s probably one of the reasons that they worked to become rich.
Stephen says that the rich aren’t being punished by having to pay a higher percentage in income taxes. Aren’t the rich entitled to protection of property under the law just like the poor? It’s their money; why do they have to pay a higher percentage than the next guy? How is that fair and just? What principle is that based on? It seems like stealing to me. I’m not saying that people shouldn’t be charitable and generous with their money; they should. I just don’t believe that the government has a right to force them be charitable in the form of taxes. Government has to based on good principles or it’s not a just system. Life isn’t fair, but the government should be.
Posted by: Tyler at March 28, 2006 09:58 AM“Re sales tax, if the poor and the middle class (depends on where you draw the line) are paying most of the sales tax, that would also mean that they are consuming most of the goods and services. If that is true, what does it mean to be poor?”
The mathematics behind this suggestion is pretty straightforward (I don’t have exact numbers on this one), since the poor have to spend a significantly higher percentage of their income on goods and services, the sales tax takes a much higher percentage of their income. Since there are more poor people than there are rich people (i mean those terms as in the bottom 50% vs the people making more than say 100-150,000 a year) the poor wind up spending more (since investments and other savings aren’t hit by sales taxes).
A sales tax is the definition of a regressive tax.
Posted by: iandanger at March 28, 2006 10:18 AMThe poor have always paid a disproportionate share of all applied taxes,including local, state, and federal taxes. take some time to add up all the taxes paid some time and divide that into your income. At the 20,000 dollar range it will come out to about 46% of income, at 60,000 it is only 37% and then quickly begins to drop.That’s right. That’s why sales tax and property tax hammer the poor the most. Those are terrible taxes. Some people are being taxed out of their homes, because they can’t afford the property tax on the homes they alreay own.
Acetracy,
Yes, I think everyone is now well aware that Republicans are the big spenders. However, Democrats help spend too. That fact is, they just take turns, depending on which happens to be the “In-Party” or the “Out-Party” at any given time.
“Nothing says freedom like forcing others to support your personal beliefs.”
This reminded me of something from JJ Rousseau’s Social Contract:
“In order then that the social compact may not be an empty formula, it tacitly includes the undertaking, which alone can give force to the rest, that whoever refuses to obey the general will shall be compelled to do so by the whole body. This means nothing less than that he will be forced to be free; for this is the condition which, by giving each citizen to his country, secures him against all personal dependence. In this lies the key to the working of the political machine; this alone legitimises civil undertakings, which, without it, would be absurd, tyrannical, and liable to the most frightful abuses.”
Since he was somewhat influential to at least a few of our founding fathers, I figured I’d put it out there.
Posted by: iandanger at March 28, 2006 10:23 AMRob, they seem more fair only if you assume fairness comes from equal treatment.
Not all equal treatment is fair, not all equal requirements improve the effeciency of a system.
It’s not unfair to ask a track star to run faster, to not compromise his performance down to everybody else’s level. It’s not unfair to ask those who can afford to pay more and still live happy comfortable lives to do so. If the tax rates were real onerous, I would find raising taxes unfair, but the rich, with their tax breaks, accountants, and low marginal rate (in comparison to other countries) have it easy to begin with. These people are paying the taxes they are paying, and coming out fine. Forgive me if I think the compassion for fairness is wasted when applied to those who have more, rather than those who have less. Forgive me if I question the fairness of favoring those already gifted by good fortune.
I don’t want to tax the rich into the ground. I plan to be rich one of these days! But it seems to me that we’ve gotten away from a culture where higher socioeconomic class carried with it a culture of obligation towards those with less, and have crossed over to a system where it’s everybody out for their own profit. Now some people might think that the best system, but I don’t. It’s a system that fails to grasp that not everybody pursues enlightened self-interest. Most of the rich people calling for less taxes just want more money, and in this day and age, asking for tax breaks is knowingly asking to contribute to an already large deficit.
My intention is by popular mandate to bring the rich to contribute more to bringing us out of this hole Bush has dug us into. Letting the current tax cuts lapse would be enough for me, for starters. The truth of the matter is, we couldn’t afford them when we started giving them out. I do not see an overtaxed society as a positive, but Bush did something no other president ever did: push a wartime tax cut. It was not the right thing to do at the time, not even to stimulate the economy. Deficit spending is deadweight on the economy and the taxpayer.
The trouble is, conservatives treat taxation as practical a moral offense, enshrining selfish love of one’s money as an American value. I have no desire to explosively grow government. We should optimize it first and expand only as it needs to be. I don’t want big government or small governement, I just want effective government, government that does us good. That’s what makes me such a non-fan of Bush. He founds the Homeland Security department and makes an embarrassing mess out of it. He fills FEMA with cronies and humiliates the country when it fails miserably to properly take care of matters.
In the end, I think the Republicans have gotten too dogmatic about these issues, and fail to think things through systematically or logically.
Posted by: Stephen Daugherty at March 28, 2006 10:28 AMAnother “social” contract that has no relation to the Constitution? Ok, I’ll bite.
Why is it fair to apply this contract to some issues, but not others?
Tyler asked: “I just love how some people think that we should be taxed based on how much we make. What principle is that based on? “
Tyler, I will give you two principles. 1)Those who control capital and own the greatest assets derive the greater benefits of government as in military protection, market and business oversight and regulation. In other words, those with the most to lose depend more heavily on the government to protect what they have, and that goes for police services around gated communities all the way to the military defense of national boundaries. If invaded, do you think the invaders would loot E. LA or Watts, or would they head straight for Beverly Hills and Rodeo Drive. No brainer.
2) No person in this country gets rich on their own unless they inherit it. They get rich off the work and labor of many, many others, from janitors to assistants, intermediary services supporting their entrepreneurial efforts. They acquire their wealth in a safe protected environment defended with blood and limbs of regular working folk in our military. They owe their society back for their safeguarding and prosperity. Just as labor owes some loyalty to the wealthy who employ them.
Posted by: David R. Remer at March 28, 2006 11:01 AM“Another €œsocial€ contract that has no relation to the Constitution? Ok, I€™ll bite.
Why is it fair to apply this contract to some issues, but not others?”
Well, to Rousseau, the general will (that is, 50%+1, but only when everyone is considering the good of all, if people are thinking of themselves, they don’t really count in the general will) always applies to all issues. I don’t personally agree with a lot of what Rousseau says, he is quite radical and much of his writting is full of condradictions, but the principles of what he is saying, you must be forced to be free, fit along with what you were saying.
Posted by: iandanger at March 28, 2006 11:09 AMRe: Paul’s Socialist Rant
I will be translating from the socialist/communist language to the capitalist/democratic language.
Taxation is a privilege in a democracy. It is the opportunity for all to contribute to a cohesive society. It seems to me that those who shout loudest for tax reductions, are those who need them least. It is nauseating to witness the greed of those who, whether by their own hard work or otherwise, having accululated wealth, seek to hoard everything, which they have acquired by virtue of the freedoms such a society confers.,Here, cohesive means socialist. Here, greed means saving money. Here, greed means making your children better off. Here, hoarding everything means preparing for the future. Here, hard work is ignored.
I have heard in the august columns of this blog site people argue that if others were not so feckless, they could have lives filled with opportunity and affluence too. It is as if it is a moral weakness in people that they do not achieve even modest financial security. No account is taken for variations in talent, intelligence, confidence, chance, inspirational influences or their opposites. It seems to be; ƒƒ‚” if I could haul my ass off the ground, then so should youƒƒ‚” Some of us get a considerable head start in life. To those that have been given much, much is expected.What “Paul” means to say here is that, people that are poor are only poor because of bad luck and bad genetics. Don’t jump on me, those are his words. Really now, which is the more bigoted and prejudiced way of thought?
Big Libs: You cannot succeed because you are not as intelligent, confident, talented. Let mommy and daddy government take care of you (Oh yea, and keep voting for us).
Common Conservative: Everyone can succeed. WOrk hard and you will have a shot. Only in dire cases should the safety net be used.
Why no one focuses on the obvious bigoted and often racist natures of liberal entitlement programs, I will never understand.
civilizeded society is a cohesive society, where there is considerable investment in raising all boats. This is not an argument for limitless welfare, but intelligent welfare, to somewhat even the odds and to help those who are weaker to try to stand tall too. Margaret Thather once said that there is no such thing as society. If these kinds of attitudes are allowed to prevail, there it is the end of society, and the emergence of a literal rat race, where no one cares about anyone else. As we say in Ireland, everyone for himself, and the devil take the hindmost. Is this the culture Americans see themselves defined by?Translation: The only civilized societies are socialist societies. Wrong, wrong, wrong. It is only by the good nature of Americans that even the poorest members of this nation can not starve, unless they wish to. Posted by: Benjamin Hackett at March 28, 2006 11:31 AM
Ian
Do you believe “one must be forced to be free?”
I would take either the “fair” or consumption tax over what we have now. Hire an accountant to do what? See how much he can save you. That is fair? This makes no sence, perhaps we should fund accountants out of the Fed budget so that everyone is represented equally.
IMO the consumption tax is the better way to go because it brings all the underground economy under the tax umbrella. We all know people that “skim” or pay under the table etc. This would all end with use based taxes. Also the entire illegal population would be taxed as well as any tourists.
The thing about our current system that bothers me is not the progressive scale, its that people can easily cheat, people that really should be paying their fair share of taxes.
Posted by: JayTea at March 28, 2006 11:44 AMStand down a little. You’re expecting politicans to act like statesmen. That’s like puting a saddle on the cow and expecting it to be a horse. Ain’t gonna happen.
JP
Posted by: JP at March 28, 2006 11:44 AMBenjamin,
Your characterization of conservatives is correct, but what they say is not true. Under our current system, everyone cannot succeede. People will try and try and fail because of many reason, primary among them, as I see it, is racism that still permeates every level of our society. Not everyone can be successful, companies have to go bankrupt for Microsoft to be prosperous, local businesses have to close for Walmart to be profitable, wars have to be fought to justify spending the way we do on military hadware etc.
People lose under your system, not everyone can be successful, and you depend on the rest of us being so caught up with making millions of dollars a year that we don’t see what is wrong with our society and our world.
…whoops, i think that rant has been building for awhile. My point is this: our society is wrong, not because of liberals or conservatives, but because we treat money as the end all be all. The people making 30,000 a year can be happy with what they are doing. maybe they dont need more money than that. Our system is based on acquisition, it is our obsession, but it isnt always what is best for our world. I believe in a society that values function over pure monetary value. In Smith’s original vision, capitalism would provide almost soley for function, since needs would be met by suppliers, but he did not account for the stupidity of the common person. It shouldn’t be that ciggarettes sell themselves, because an educated population should know the down side and not spend their money on them, but we do, because we arent the rational actors everyone supposes we are.
Posted by: iandanger at March 28, 2006 11:50 AMkctim,
I don’t think so, but that wasn’t my point. Rousseau’s theories were influential in the formation of many political systems, so his opinions matter, but I disagree with many of his points. He also thought that women should stay at home and fulfill the role given to them by society, and that they should not be educated. I don’t agree with that either.
Posted by: iandanger at March 28, 2006 11:57 AMYou€™re expecting politicans to act like statesmen. That€™s like puting a saddle on the cow and expecting it to be a horse. Ain€™t gonna happen.
Exactly. Maybe, when the pain of our negligence (voters and bought-and-paid-for politicians) finally catches up with us in a major way (which may not be too long from now), voters (might) finally do what they were supposed to do all along.
But, no reforms, no tax reform, nothing will be possible until then.
Until then, things will continue to become more corrupt, and when voters (if ever) decide it’s time to do their part, they will have waited until it is much more difficult (maybe hopeless).
Unfortunately, pain is a lagging indicator to the negligence of irresponsible government and slumbering voters, and we have short memories and a lack of knowledge of history, which is why we usually have to learn the hard, painful way (over and over).
Everyone has know the tax system is a farce for decades, but Congress chooses to do nothing about it (as usual). That’s because bought-and-paid-for incumbent politicians like it the way they have perverted it. There are loop-holes galore, and it’s all legal.
Regarding sales tax…the Fair Tax has a few disadvantages (which I won’t go into all now), but any tax system may be hampered by the possible necessity to drag portions of the old tax system along too (i.e. Social Security, Medicare, Medicaid, etc.).
Also, here’s a very interesting point. One question about any tax system that is continually asked is:
Will everyone (excluding the poor) pay their fair (or equal) percentage of tax related to income ?
Interesting isn€™t it? What does that tell you? It seems many people still want the end result of any tax system to be that everyone pays their fair (or equal) percentage of income (excluding those below the poverty level, which would pay zero tax).
So, if we€™re continually tasked with proving that any tax system, in the end, must fairly tax income the same percentage (excluding the poor who pay zero tax), then why not simply retain the income tax, except make it a 17% Flat Income Tax Rate, eliminate all loop-holes, deductions, subsidies, which will also mean little or no changes for accounting for Income tax, Social Security tax, and Medicare tax.
Also, sales tax and property tax should be eliminated, because those taxes hammer the poor the most, which just pushes them onto welfare.
Of course, none of that is likely to ever happen in my lifetime. These reform will take a long, long, long time (if ever) to occur.
Posted by: d.a.n at March 28, 2006 12:12 PMPaul in Euroland-
You will be happy to know that tomorrow I will begin a two day workshop, “Intercultural Differences: The French/German/American Interface.”
Should be quite interesting….
Posted by: George in SC at March 28, 2006 12:23 PMPaul in Euroland
This is off the topic, but I agree that many, if not most, Americans have never been in the same room with a French or German citizen, let alone interact with them in their own cultures. I spent a toal of 11 years in Germany (West Germany at the time) and got to know the people well. I made many good friends, many of whom I still have contact with. My wife and I hope to get a chance to visit them someday. Sure, we met some #@@$%^, but you find them everywhere. When my son was little, we were living in a little town near Erlangen. One night, my son became violently ill and we didn’t know where to turn. I awoke my landlord at 3 a.m. and, though at the time I spoke little German, he immediately recognized the problem and took us to a local doctor, who transported my son to a nearby German hospital. They stabilized him and then a German ambulance transported him to the U.S. military hospital in Nuremburg. We never received a bill from the German doctor or hospital. My landlord and his wife even visited my son in the hospital. I don’t agree with many of the policies of the German government, but I will always a special place in my heart for the German people.
Posted by: Bill M. at March 28, 2006 01:01 PMiandanger:
Seems to me that in ANY system, there will be those with more and those with less. I suppose in a true form of communism, it wouldn’t be that way, but there never has nor ever will be a true form of communism in actuality.
Its not necessarily a zero-sum game, in which one company’s success means another company’s lack thereof. You mentioned Microsoft, but recognize that 40 years ago, there was no Microsoft. They initiated a new business, and helped make computers what they are today. They did so with hard work and with a unique idea. Its no longer unique to us, but it certainly was 20 some years ago.
As a result, Gates has made billions due to a highly successful product, just as Henry Ford made his money off a highly successful product. But Gates has also looked out for his fellow man by giving 30 billion (not sure the exact amount) to fund the Gates Foundation which does good works all over the globe.
Isn’t that what we want from people—-be creative, figure out how to make things better, provide new and innovative ways to increase productivity and then give back to help society in general?
Posted by: joebagodonuts at March 28, 2006 01:15 PMIan
Thanks for your input on Rousseau.
“I believe in a society that values function over pure monetary value”
How can a person be a value to society, if that person is dependent on that society for survival?
“an educated population should know the down side and not spend their money on them, but we do, because we arent the rational actors everyone supposes we are”
Or maybe we believe it is our right to spend our money how we want and to live our lives as we want.
When people are dependent on the govt, the govt starts dictating what they think is best for the people, it then controls how those people live their lives.
Your smoking example proves this.
People want govt to use other peoples money to pay for their personal choices. In order to do that, govt then controls what the people do in order to curb costs.
Our tax system and what we waste our tax money on is a joke.
The very fact that those who succeed are then punished for doing so and have no choice in the matter, goes against everything our Republic once stood for.
Stephen,
I said,
I don€™t have a problem with a progressive tax structure per se. What I do have a problem with is that we continue to discuss this with no real numbers or any sort of reality check.
You said, Forgive me if I think the compassion for fairness is wasted when applied to those who have more, rather than those who have less. Forgive me if I question the fairness of favoring those already gifted by good fortune. and
Most of the rich people calling for less taxes just want more money, and in this day and age, asking for tax breaks is knowingly asking to contribute to an already large deficit.and
The trouble is, conservatives treat taxation as practical a moral offense, enshrining selfish love of one€™s money as an American value.and finally,
In the end, I think the Republicans have gotten too dogmatic about these issues, and fail to think things through systematically or logically.
So my question is, who is being more dogmatic?
Can you engage in this discussion without bashing someone? Do you even try to see the other side of the argument without your dogmatic, zero-sum vision of the tax system?
I’ve asked for definitions. Who is rich? Who is poor? Take your best shot. Do some research. Do the answers conform to your view of the world?
Posted by: Rob at March 28, 2006 01:46 PMkctim,
I think you misunderstand my point. I am saying that if people were smart the way Smith assumed, cigarettes wouldn’t sell the way they do, because they are a detriment to society as a whole. Don’t believe me? Look at the major costs that cancer and heart disease and other health problems from smoking leaves for the rest of us, say, paying into insurance plans. People should be free to make their own choices, but if we were intelligent no one would be smoking.
This has nothing to do with the government. Excessive acquisitiveness is not good for a society, because things that are bad for society as a whole (like smoking) wind up becoming major industries with lobbyists and power. I hear over and over again people talking about how people are punished for their success by having to pay more taxes, this is absurd. They are living better than 99.999% of the world population, they don’t really have anything to complain about. Britney Spears whines about things all the time, no one listens to her, because shes priveledged. These people are priveledged, period.
joebagodonuts,
You aren’t wrong in saying that that is a problem in every society, but the excesses of our current society are dangerous on a global scale, we care more about profit and our stock market than the long term stablity of our economy, just look at the deficit/national debt.
And microsoft, look at all they have done, controlling their market, forcing companies out of the business, forcing users to use their bundled software, etc. Microsoft has ruined many other people’s lives and businesses along its road to being one of the largest companies in the world, business isn’t always zero sum (the fast food companies have found a way to exist together), but it generally is.
Posted by: iandanger at March 28, 2006 02:03 PMMany of the commenters assume that the lower 50% do not pay taxes because they do not make enough. A number of single parents can claim head-of-household and other deductions on their income tax. Thus, a single parent who is raising one child and earning $30,000 plus receiving $5000-$10,000/year in child support (which is not declared income) not only get all their federal tax back, but in many instances, will receive up to twice that amount (i.e. we are paying them to raise their kids).
All adult American citizens should contribute toward the tax base. There should be no free rides. This country was founded on opportunity, not guarantees of a good life. Unfortunately, we now have several generations that think they are entitled to the good life and not have to work and sacrifice for it.
Posted by: Bubba John at March 28, 2006 02:20 PMIan
I understand your point, you presented it well.
I’m asking why others have to care what somebody else does with their own life?
“Don€™t believe me? Look at the major costs that cancer and heart disease and other health problems from smoking leaves for the rest of us, say, paying into insurance plans.”
Yes, I do believe you.
The “rest of us” have to pay for these major costs because people have become dependent on others to do for them.
There is no incentive for people to do better if they don’t want to. The govt will take care of them.
“People should be free to make their own choices”
Amen! But shouldn’t that freedom of choice also include govt programs?
“They are living better than 99.999% of the world population, they don€™t really have anything to complain about”
But what right do others have, to tell them how to live their own lives?
If I don’t believe in helping others, what right do you have to force me to support what you believe is the right thing to do?
Priviledged people get treated better by society because of their money. But when it comes to the govt, they are still just people and should be treated the same as everyone else.
Posted by: kctim at March 28, 2006 02:23 PM.robd. it is little off topic. also factor in when or if you go to a tom hanks movie or buy a tiger woods t shirt or golf clubs factor in our copyright laws, today in any city you can buy a pirated dvd or cd or t shirt or anything you want. ive even seen them in swap meets. our infringement of our copyright laws are abused by a large industry of law breakers.also a dose of culture is good for the soul.if you ever have the chance take a trip to europe or asia or latin america or africa or the middle east. most all of us came from one of those places.
Posted by: RODNEY BROWN at March 28, 2006 02:37 PMkctim,
The problem is that, i believe, people have a general concern for the wellbeing of others. This rarely outstripes their concern for their own wellbeing, but, as an example, if you see someone suffering, you want to help them.
If we emphasize personal repsonsibility to the point that we don’t take care of people in need, what happens to those who have worked their entire lives and who now have some horrible accident. A person I work with had a stroke a few weeks ago, and because medical costs are so high, work has been collecting money from employees to help contribute to what hospitalization and recovery will cost. We can’t even make a dent in these costs, but we all try and help out, because the insurance company won’t cover anywhere near what his care costs, and since he has not children, only his mother is there to help him out. Since his mother is on a fixed income, they can’t afford to pay for his healthcare. Malthus would say we should let people like this die out, forget them, because they’re a burden on society, but I don’t think that is how most people would feel.
Smoking is an odd problem, because those people are willingly doing that damage to their body, so i could see exceptions (like giving smokers different health benifits at different rates through health insurance) for them, but it doesn’t change the fact that the most vulnerable aren’t always going to be able to cover their costs. Its a moral decision, and one that makes me very uncomfortable. I believe in liberty, and I think that under Smith’s system things can work, but our society never came close to what he imagined. This means we either have to follow what Malthus and other social darwinists suggested, or we have to try and operate within the system as it is now.
Posted by: iandanger at March 28, 2006 02:57 PMWell if people earning over $29,000 are in the upper 50% of tax payers then we are in deep trouble because it means 50% are pretty poor by the current cost of living. When I speak of taxing the rich, I’m talking about taxing the those making over say $250,000 a year and not those making between $29,000 to $75,000 a year. Those making over $75,000 should pay a higher rate than those making less, but those making over half a million should be taxed at a higher rate. After all if a person has $500,000 and is taxed 50% they still have $250,000 of spendable income. That’s quite a bit. If you tax someone making say $70,000 at 50% they’d only have $35,0000 spendable income. The the percentage of tax is a lot harder on those middle income peope. And of course if you make $1 million at a 50% tax you’d have $500,000 in spendable income. But how about those making 50 to 100 million. The $50 mil person would have $25 mil in spendable income and the $100 mill $50 mil in spendable income. Seems like plenty to me.
Posted by: Duke at March 28, 2006 03:15 PMDuke,
Why not tax everyone making over $18K at a flat 17% ?
That way, the tax on $100K is twice the tax on $50K .
Why is it fair to tax people at different rates ?
Isn’t the fact that 17% of $100K is twice as much as 17% of $50K progressive enough ?
For example:
Therefore, the income tax for each person (after subtracting the $18K exemption) is :
A tax = $0 since $15K is less than $18K;
B tax = $5,440=0.17 x ($50K-$18K)
C tax = $12,240=0.17 x ($90K-$18K)
D tax = $30,940=0.17 x ($200K-$18K)
E tax = $149,940=0.17 x ($900K-$18K)
F tax = $1,526,940=0.17 x ($9,000K-$18K)
If not, it tends to look like envy, unless you can explain why it is fair.
Posted by: d.a.n at March 28, 2006 03:36 PMIan
Thank you.
While I disagree with much, I do respect your opinion and you presented it well.
Thank you for giving me your time.
Rob:
Did I miss a class somewhere? Are owners now supposed to pay workers more because the can and not because they have to to keep up with the market?
Isn’t that “Trickle down economics?”
Wanna be Jack:
“if it weren€™t for all the spending on cockamamie programs that should never have gotten started in the first place, nobody€™s taxes would have gotten high enough to be objectionable.”
I didn’t know that the Iraq war was a program.
Vincent,
Not even close to trickle down, if I understand it correctly. Closer to socialism really.
Posted by: Rob at March 28, 2006 04:44 PMRob,
Then simply put, what is the rational of giving big business tax breaks?
Posted by: Vincent Vega at March 28, 2006 04:45 PMIn general, I think that it is to encourage economic activity. Could be more money for R&D, retool factories, or just be there so that the tax base grows.
Don’t think that it generally has anything to do with paying the workers more. That is a side affect from the increased activity.
What Stephen said was the workers should be paid more because business can. My understanding is that workers should be paid more because business have to. Big differences in the starting factor, same result.
Posted by: Rob at March 28, 2006 04:54 PMiandanger
I must appologize. I had you stereotyped as one of “those on the other side”. Your writings above has me changing my mind. I agree with most of what you said.
On taxing incomes. Income tax should be abolished. As I said above there are many institutions in the federal government that should not be there on constitutional grounds. The tenth amendment spells that out pretty clear. If it is not mentioned in the constitution then it is up to the states to deal with the issue. Now if those un-constitutional agencies were abolished and the states picked up where they should, then the federal income tax could and should be abolished and the national debt could be paid down rather quickly. The other facet to that is that the Congress must, absolutely must, spend only what is necessary to spend. By abolishing the un-constitutional agencies the amount of pork or earmarks or whatever other symantical word is used, would be reduced to almost nothing and with a simple amount of wisdom could be abolished totally. Taxing at a state level would be a new issue. But at this time we are referencing the federal level
Posted by: tomh at March 28, 2006 05:18 PMDavid Remer,
You are absolutely correct, the rich have more property to protect, etc. I realize I wasn’t clear in my statement so I will explain. I don’t understand why someone should be taxed a higher percentage of their income just because they make more money. That principle doesn’t ring true to me; it seems unjust.
I do agree with much of what you said and you presented it well. If we look at the 17% flat tax, someone who makes 200K a year does pay more tax (in total amount) than someone who makes 50K a year. Therefore, they make up for the extra cost to the government to protect their property, etc. My point is that it should be the same tax percentage, not necessarily the same total amount. I apologize for the lack of clarity.
I know that many have brought up the point that this flat tax won’t solve the financial problems (i.e.-national debt) that our country is facing and they’re probably right. That’s where fiscal responsibility comes into play and cutting government waste (which there is plenty of). With the new tax structure, you could get rid of the IRS completely. The money could flow from the states to the federal government in one direction which would eliminate a lot of that waste. Everytime money changes hands, something always gets taken out.
Real incomes are falling for all but the richest. Have been for five years. How does that figure into your conservative calculus?
Posted by: Mental Wimp at March 28, 2006 05:36 PMHow do the poor choose not to consume? Die?
Posted by: Mental Wimp at March 28, 2006 05:37 PMYes, Tyler, the rich are maltreated at every turn. They have to pay more in taxes and when they die, their rich little children have to pay more taxes. You’d think they’d just give it away to avoid all the hassle they get for being rich. But, no, doggedly, bravely, they cling to their wealth, even laboring mightily to influence the political process into lowering their taxes further, so they get even richer, thereby becoming even more miserable paying all those goddam taxes. Well, I, for one, would like to offer to take their places. Yes, I am willing to suffer the slings and arrows aimed at the wealthy. It’s time they got a break, don’t you think?
Posted by: Mental Wimp at March 28, 2006 05:41 PMMental Wimp,
You’re welcome to feel that way all you want; fortunately, government has to be based on principles, not feelings. Yeah, I really don’t feel sorry for the rich either, but they deserve a fair shake like everybody else. Like I said before, yes, I think the rich should be charitable and generous with their money, but I don’t believe that it’s the government’s responsibility or anyone’s right to force them.
Posted by: Tyler at March 28, 2006 05:59 PMtomh-
There is a constitutional amendment specifically written to allow income taxes. Didn’t you get the memo?
Tyler-
If I’m not mistaken, the tax in question would maintain a bureaucracy, just like the old one. Instead of being merely concerned with income, though, this tax would intrude on nearly every business manner imaginable. That’s the nature of it. Then there would be the processing of all those applications for refunds for the exemption that I believe is part of the deal.
The Republicans have their heads in the clouds policy-wise. They’ve got any number of radical schemes for how to save the country, and every one of them has serious questions about them they can’t be bother answering. Ideologically, they are as rigid minded as they are confused. You tell me how its socialism to set up public schools, but not socialism for the government to subsidize private education with taxpayer dollars. There was all this talk about fiscal responsibility in times past, and look what they do: they spend. They don’t even have the decency to look the American people in the eye and ask them for the money to cover their increased spending.
Do I want the Republican party coming up with any more bright ideas about how they can change the country? Not really, the past ten years have been more than sufficient to demonstrate how well the Republicans really govern. At least with Clinton in office, there was somebody who could, and in fact did, tell congress no. But this president? He should have welcome printed on him. He’s passed everything they’ve given him.
Frankly, I want some leaders in there who have some dedication to quality governance, who don’t secretly delight at the failure of this government to do the things it’s been obligated to do. The time has come to put people in government who consider governing a job to be done well, and not simply an opportunity to leapfrong higher up in the corporate aristocracy.
Posted by: Stephen Daugherty at March 28, 2006 06:36 PMStephen,
I agree with you that this administration and this congress have not reigned in the spending as promised. Do I think the democrats would’ve done better? Nope. Am I pleased with the way things are going now? Nope. How can you be sure that any politician is going to do what they said they were going to do? You can’t; you just have to vote for who seems to be honest and the person who’s ideas make the most sense to you. Since I didn’t agree with much of what Kerry wanted to do, I didn’t vote for him. I don’t agree with everything that Bush does and he’s not conservative enough for me, but he was the best choice at the time, IMHO.
Yes, it is socialism to set up public schools; I don’t know what you mean by subsidizing private education with tax dollars. I assume you mean vouchers for private schools. Giving vouchers is just diverting the money and the student into a private school. How they decided how much that voucher should be is beyond me; and yes, it’s still socialism. What should we do about it? I’m not entirely sure.
Posted by: Tyler at March 28, 2006 07:30 PMtomh,
There are a lot of changes I think could be made, in the event of a revolution (I consider a revolution in politics, if not an armed one, in the works at the moment, people are going to start waking up soon, and they’ll realize our current state is unsustainable). For the time being, the status quo, and the health of our nation require maintaining tax rates at least at their current level, with decreases in wasteful government spending and increases in at least some taxes, otherwise we wont be able to survive the destabalization of the dollar in the future (which will happen after our debt hits a certain point).
There are problems with every tax system, every form of government even, which is why utopians almost always invision a government withering away, so that the usual problems can disapear with it. I think income taxes work well in theory, but they have to be applied correctly, not in the insane complicated way they are now.
Tyler,
“Yes, it is socialism to set up public schools”
Then you must think Adam Smith was the father of socialism. He believed that government should pay for education, because it is a public trust and it allows everyone to achieve their natural potential. He also thought that roads and dams and anything else that wouldn’t be profitable to operate should be done by the government.
What, in you opinion, should schools be like? should only the rich be able to go to school? Do you like Feudalism, because thats how things were. Public education exists and is necessary for the health of an economy, otherwise the few will get educated, and the masses won’t be able to, leading to a lower level of qualification for jobs. This is a simple concept, and the reason no reasonable politician has ever opposed public schools.
Posted by: iandanger at March 28, 2006 08:01 PMTranslation: The only civilized societies are socialist societies. Wrong, wrong, wrong. It is only by the good nature of Americans that even the poorest members of this nation can not starve, unless they wish to. Posted by: Benjamin Hackett at March 28, 2006 11:31 AM
Ah, the folly, ignorance and arrogance of youth! Benjamin malevolently puts words into my mouth and corrupts those I offered myself. I am not a socialist. I am not a communist. I am a cpaitalist. My country is a capitalist society, and a very successful one, with a 4.4% unemployment rate and growth rates over the last 12 years of so of 10 - 11% ranging down to about 5% in the last couple of years.
It is a fact that in my country there is no arguement about progressive taxation, although we are one of the least taxed countries of Europe. There is no arguement about making provision for the less fortunate, provided it does not carry a moral hazard of dependancy on such help to the exclusion of genuine effort on the part of the one being aided. In case it appears that I am holding my country up as a paragon, I am not. There are many problems in my country, but we still retain a measure of the civilization of a small community, with an empathetic compassion for the less fortunate among us. In general as a people, we do not object to our taxes being used to lift the less fortunate up in life through education and healthcare, and yes, even welfare when it’s really needed. The naked greed displayed by the wealthy in the US, or at least some of them, ( I seem to remember Bill Gates said when GW introduced the tax cuts, that the rich didn’t need them) and their apologists, is a sorry sight to behold, and does no credit to a civilised society. It beggars belief that so many believe in the American dream, and yet so few achieve it. Wake up and smell the coffee Benjie, I don’t know what your financial situation is, but if you only aspire at this point in your life to wealth, the odds are not in your favour.
As an addendum to my last post, Ireland has had free high school education since the sixties, and free college education since 1995. The impact of this has been to propel Ireland to the forefront of the rich nations of the world, from one of the first worlds poorest. Ireland became known as the Celtic Tiger, and the above mentioned investment was the single most important factor in that amazing transformation. TAX IS GOOD FOR SOCIETY!!! And because those taxes were levied, the rich get to benefit more from a more affluent society. What goes round Benjamin, comes round. Vivre la difference!
Posted by: Paul in Euroland at March 28, 2006 08:37 PMIandanger and Paul in Euroland:
You guys have my vote for Ministers of the Treasury.
You can also handle Social Security!
Tyler-
Private schools are private enterprises, which must compete for a limited pool of students whose parents are able or willing to afford the tuition. Left to itself, most people are priced out of the private school market.
What vouchers promise to do, by their very nature, is use government money to put people in the market for a service: private education. Now with public education, you could argue that what you have is a necessary service to the community: free basic education, regardless of income, race, religion or whatever.
Vouchers, though, take a private market, and use public funds to take what the few can afford and make it more accessible. They are, to put it quite bluntly, an infringement on the market forces. Those who rely on vouchers might find new academies pop up whose existence solely depends on the vouchers, and already established instutitions would find their markets flooded, reducing the effort needed to gain students.
Either way, there’s less need to maintain high standards. Fast Food restaurants don’t need four star chefs to attract customers, since circumstances make the food cheap and the quality of the food less important. People value their high class cuisine because its not cheap, it’s not easy, and quality is not a compromise. The chefs take their customer’s tastes seriously, because they know success in the rarified field requires skill and expertise. Those who fail to measure up don’t get the paying customers. But what if somebody subsidized high cuisine?
Well, then, it would suffer the tragedy of the commons. You would have a broader array of customers, less pressure to innovate and achieve excellence, and nothing to lose by compromising on quality. In fact, people would likely build new restaurants just to take advantage of it.
Vouchers are socialism, and more so than the public schools, because here, we have public money warping a private market.
This reflects some of the warped thinking of the right at this moment. They resent Public schools because they are not market-produced institutions, yet they are fully willing to betray the free market by subsidizing a private industry.
What keeps this going is the continual fear and distrust of the center and left. As long as you won’t choose center/left politicians or at the very least moderates and people of independent character, the people who pull this crap will continue to do so. If you want to keep this country somewhat to the right, you have to clean house.
Posted by: Stephen Daugherty at March 28, 2006 11:37 PMHere’s a link which ought to give food for reflection to the Benjamin’s of this world;
http://www.responsiblewealth.org/estatetax/nys_letter_3_2006.html
And this from wealthy people Benjamin, but I guess they’re just commies or socialists like me.
Posted by: Paul in Euroland at March 29, 2006 03:02 AMFor incomes under $60k, it seems like a non-issue, lowering our taxes a little, that’s nice, but not enough to really impact us.
For the rest, all the numbers are too confusing. How can you say that the rich pay 35%… but they don’t pay it so 17% would be higher than what they actually pay… but 35% is UNFAIR. It makes no sense whatsoever.
And tax reform is not over… the poor will continue to vote for tax breaks for the rich — that’s certain.
:)
Squeaky
PS - here’s a link that I found thoughtful:
http://www.jewishworldreview.com/cols/sowell052499.asp
Interesting article Squeaky. Thought a few numbers were worth reposting:
If the incomes of all the people in an American household adds up to $72,000, that puts them in the top 10 percent of all households.
If all the incomes in your household add up to $127,000, then you are one of those top 5 percent of all households.
Posted by: Rob at March 29, 2006 04:39 PMI have no say in the operation of General Motors because I have no stock, no investment if you will. This is as it should be, why should I? If you don’t have a W-2. 1040 or other show of your effort, contribution or stake; why should you have a say in the business of the the government and keep voting yourself some of my check.
The Constitution only calls for funding the common good. Every $ going to any individual is patently wrong. Minimum wage was never intended to make a house note or put kids thru higher ed. Can you say entry level? First job? Career progression? If that is your limit then you must live within your means and capabilities, that’s called life. We all can’t have a “mansion and a yatch” (quote from Elmer Fudd).
http://shudaknown.blogspot.com/
Posted by: R. Paul Gani at March 29, 2006 10:57 PMR. Paul Gani,
The minimum wage was created to prevent companies exploiting labor (the way they do now with illegals), and was intended to require them to pay at least what it costs to survive to their employees. As it stands now, a person cannot realistically survive on minimum wage almost anywhere in the country, which leads to them requiring other things, such as food stamps or welfare or subsidized housing and daycare, in order to not starve.
Companies that pay low wages thrive on state handouts, and just to be clear, most minimum wage workers are not children, despite what people like rush limbaugh claim.
Posted by: iandanger at March 29, 2006 11:42 PMI remember Steve Forbes advocating the flat tax issue back in 92’ when he was running for presiden. I’ve also have read about the fair tax as advocated by Neil Boortz. I definitely find both programs as possible alternatives to our current system of taxation. Until new ideas are able to be tested in reality, they will continue to be “talk” to most people.
The only way anyone can be sure of any true tax reform is by experimentation. The different methods should be tried at the state level and not force on every state at the federal level.
To advocate a tax reform plan that hits all 50 states at one time is completly unreasonable and not practical. This all-or-none approach to tax reform will never get any legs until individual states are allowed to try different approaches for themselves. That way each state becomes a laboratory for trying new ideas. When one state hits onto something that is efficient and practical, then the other states will learn from it and adapt to it themselves.
I think the federal government should provide incentives to states to experiment with different tax methods.
The president could come out and advocate a plan that allows a small number of states the right to completely change their tax policies as they see fit. The plan would allow a state to enact it’s plan for at least one year( or whatever may seem more reasonable), if in that year that tax revenue equals what it had been under the existing system, then it’s allowed to continue.
If it’s a bust, then the federal government will cover all lost revenue during that time and the state goes back to the existing system. It would be best to allow the states with the smallest populations first crack at it. The governor and the state legislatures would be given the opportunity to volunteer their state for a tax reform program.
The priority of the constitution was to the protection of the states first. Only when states are allowed to try bold ideas will the country get any serious reform of any kind be truly possible. This same approach could be used for social security and other important issues.
Let’s work on it on a small scale and work our way up instead of the top down approach when the federal government is involved. We are continuing to give the federal government more and more power at our own detriment.
Where did Sowell get the 90th percentile income is $72,000? According to this census report, page 44, the 90th percentile income in 2003 was $118,200.
http://www.census.gov/prod/2004pubs/p60-226.pdf
Posted by: Other Rob at March 30, 2006 09:52 AM>>The president could come out and advocate a plan that allows a small number of states the right to completely change their tax policies as they see fit.
Nick,
Most states have taxation written into their respective State Constitution. I don’t think the President can over-ride that. But, I didn’t think he could over-ride the national Constitution by wire tapping American citizens either, so maybe he can…
Posted by: Marysdude at March 30, 2006 11:44 AMYes, states control local and of course state taxes, but federal taxe code is written out of Washington. I’d start off on the local and state level then.
The wire-tapping of American citizens is bogus and and Dem foolish enough to believe this will take Bush down is kidding himself. It was well within his authority, congress can only can only try to establish oversight…FISA was badly outdated anyway.
Posted by: Nick Hillman at March 30, 2006 02:17 PM>>The wire-tapping of American citizens is bogus and and Dem foolish enough to believe this will take Bush down is kidding himself. It was well within his authority, congress can only can only try to establish oversight€FISA was badly outdated anyway.
Posted by: Nick Hillman at March 30, 2006 02:17 PM
Nick,
I don’t think very many Dems think the wiretapping alone will bring him down. As for the tapping itself goes, I wish you’d prove he only taps al Qaida. If you can do that, I’ll admit it’s bogus. Until then, my opinion is as good or better than yours…at least I have the Constitution on my side.
It sounds as if many people here are not aware of the basic aspects of the FairTax. Pickup a copy of the new paperback version of the FairTax Book released this week, or at least read some of the research about this located at www.FairTax.org org or the basic tutorial located at www.FairTax.net/1.htm
The FairTax is the ONLY tax reform proposal that completely untaxes the poor. It will certainly NOT stifle the economy, this is in direct contrast to the 10.5% GDP growth that’s expected to occur within the first year alone after the FairTax is implemented. Our whole trade deficit resides on the income tax code which gives American produced goods a major disadvantage at export while imports have a competitive advantage.
Please RESEARCH AND LEARN about this proposal before prejudging it.
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