Taxes, Treasury Secretary Geithner and Joe Friday

Friday, January 8, AD 2010

Being self-employed I always have the great joy of paying my taxes four times a year in estimated payments.  I just did the one due on January 15, and in the fine mood that always puts me in, I thought it was time to recall  Treasury Secretary Tim Geithner and his difficulty paying some of his taxes.

The Wikipedia article on Geithner gives an excellent summary:

Tax scandal

At the Senate confirmation hearings, it was revealed that Geithner had not paid $35,000 in self-employment taxes for several years, even though he had acknowledged his obligation to do so, and had filed a request for, and received, a payment for half the taxes owed. The failure to pay self-employment taxes, in part due to the way his employer reported his wages which was not in accordance with tax law, was noted during a 2006 audit by the Internal Revenue Service (IRS), in which Geithner was assessed additional taxes of $14,847 for the 2003 and 2004 tax years. Geithner also failed to pay the self-employment taxes for the 2001 and 2002 tax years (for which the statute of limitations had expired) until after Obama expressed his intent to nominate Geithner to be Secretary of Treasury. He also deducted the cost of his children’s sleep-away camp as a dependent care expense, when only expenses for day care are eligible for the deduction. Geithner subsequently paid the IRS the additional taxes owed,and was charged $15,000 interest, but was not fined for late payment. As President of the Federal Reserve Bank of New York, Geithner annually completed an ethics statement noting any taxes due or unpaid, along with any other obligations. Geithner’s completed statement did not surface during confirmation hearings.

In a statement to the Senate panel considering his nomination, Geithner called the tax issues “careless,” “avoidable” and “unintentional” errors, and he said he wanted to “apologize to the committee for putting you in the position of having to spend so much time on these issues.” Geithner testified that he used TurboTax to prepare his own return and that the tax errors are his own responsibility. This statement is in conflict with statements by the Obama campaign that Geithner was advised by his accountant that he did not owe the taxes. The Washington Post quoted a tax expert who said that TurboTax has not been programmed to handle self-employment taxes when the user identifies himself as being employed. Geithner said at the hearing that he was always under the impression that he was an employee, not a self-employed contractor, while he served as director of the Policy Development and Review Department of the IMF. Geithner comments are contradicted by the Senate report that showed he was not only informed of his status, but that he actively applied for the allowance.

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3 Responses to Taxes, Treasury Secretary Geithner and Joe Friday

  • Amazing: Donald and I have a point of agreement!

    Count me a doubter from the beginning on Mr Geithner. There’s a certain breach of trust that a man chosen to a post like Treasury wouldn’t have his own treasury in order.

    On one hand, I can appreciate that Mr Obama would want a talented guy–and there’s no doubt the man is talented–on his team. My criticism is mainly that Mr Geithner was tagged as the superstar of economics from the beginning. This administration *had* to have him.

    On the other hand, even if we can concede Mr Geithner was the best, how much better than #2 could he really have been?

    Clearly, he could survive this in a way the head of the IRS might not have been able to. Or if we had been in less of an economic crisis, perhaps it would have been easier to jettison the nomination and settle for the second fiddle.

    The symbolism of it will probably not harm either the president or the head of Treasury, either in the next 3-7 years or post-administration. I suspect some people who make honest mistakes with their taxes (and those, perhaps like Mr Geithner, who don’t) won’t avoid the economic or professional harm as you’ve described here, Donald.

  • Calculating self-employment tax is Tax 101. Someone with Mr. Geitner’s resume should not have made an error in calculating this tax. He should also have reviewed his TurboTax-prepared 1040 before signing it and mailing it to the IRS. (He failed at his personal obligations.)

    Mr. Geitner is too incompetent for his current position, a crook, or both. Our government should only hire honest, qualified individuals and his dishonesty scares me more than his incompetence. (What secret deals is he cooking with whom?)

  • (What secret deals is he cooking with whom?)

    Yves Smith (“Naked Capitalism”) referred to him last spring as a ‘poster child for regulatory capture’. Seems about right.

How to Get There from Here

Tuesday, July 28, AD 2009

There’s been much discussion of late about what other country’s health care apparatus the US should consider emulating, and in such discussions France is often mentioned. Now, all cheerful ribbing against the French aside, their health care system is not nearly as “socialized” or nearly as afflicted by treatment denials and waiting lists as those of the UK or Canada. It is also rather more like the system that the US already has, in that it is a hybrid public/private system, though in their case there is a guaranteed base level of coverage everyone has through the government (funded via a hefty payroll tax — not unlike Medicare) which most people supplement with private coverage. Most doctors are in private practice, and 25% do not even accept the public plan, just as some practices in the US do not accept Medicare. However, everyone does have that minimum level of coverage, and the French spend a lower percentage of their GDP on health care than the US (11% versus 16%) which when you take into account that France’s GDP per capita is a good deal smaller than that of the US (which is the polite, economist way of saying it’s a poorer country) works out to the US spending about twice as many dollars per person on health care, while still not having universal coverage.

So what are we waiting for? Why don’t we go enact the French system here right now? Why doesn’t Obama put on a jaunty beret, dangle a cigarette coolly from the corner of his mouth, hoist a glass of wine, and just say, “Oui, nous pouvons.”

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9 Responses to How to Get There from Here

  • Well done Darwin,

    Many factors in health care. One is physician salaries as pointed out in other posts. Many factors in physican salaries as you point out including the high cost of medical school and indirect malpractice costs. If those aren’t addressed while cutting physician salaries, problems will most certainly follow.

  • Dear God… someone finally stopped talking about British and Canadian health care and realized that are quite a number of schemes to reach universal coverage and single-payer systems aside (I don’t feel like having that go-round), France is a pretty good model.

    Moreover, I think if we attacked education (costs) and provided greater assistance to medical students (not just with public funds), we could slightly lessen doctor salaries — as health care costs go down and depending on their specialty.

  • And by ‘lessen’ I don’t mean put caps on it via legislation.

  • Related to this but in a more general sense: I think that dealing with a situation like this (in which it becomes necessary to drive a group of people’s income down for the common good) the impersonal nature of markets is generally more socially acceptable than government action. I don’t think anyone would tolerate reducing doctor pay 30-40% by fiat, even when they generally make a lot of money. But creating the conditions for it to gradually reduce due to market pressure doesn’t have the same antagonistic edge.

    Just had to get the market plug in. 🙂

  • 30 – 40% again seems not to take into account malpractice costs let alone medical school. Maybe your figures take into account malpractice costs. But if not, using your figures, a specialist in the US averages 230k vs 149k in France. Subtract the average 55k for malpractice and you get a difference of 175 vs 149. Excluding medical school costs you’re now talking about a 14% difference, not 30 – 40.

    What’s the average malpractic attorney’s pay?

  • Actually just Googled it. In 2006 it was 100k.

  • I guess, I’m not sure how stuff like malpractice insurance is usually accounted for. Do doctors always have to pay it out of pocket (thus out of their personal pay) or is it often payed by their practice as a business expense?

    Either way, significantly reducing the malpractice lottery would have a salient effect on health care prices — not just in allowing for health care providers to charge less, but also reducing the number of extra procedures which are done for tail covering purposes rather than medical effect.

  • Depends on the practice. Those that are stand alone pay out of their own pocket. Those in large practices or hospital based practices get it paid for. But that will be considered part of compensation and usually salaries are lower to reflect that. Either way, there is a cost to income from malpractice premiums.

  • The cost of malpractice insurance is inflated by insurance companies, just as insurance companies inflate the cost of medical insurance. But the big issue is that usa doctors and hospitals do not like to be held accountable for their bad medical practices and poor outcomes. Their private for profit medicine ranks 37th in outcomes compared to other countries, which rank muych better using national health programs. Malpractice costs would clearly go down if usa outcome rankings improved. The fact that france ranks number one, having the best outcomes, while paying their doctors much less, is all just a further indictment of our private medical system in the usa.

Basing Victory on Failure

Monday, July 20, AD 2009

It is one of the interesting contradictions of politics that political factions sometimes rely on the problems they seek to eliminate for their existence. For instance, it has been widely noted that while it is generally part of the Democratic set of ideals to reduce economic disparity, while Republicans tend to be accepting of it, Democrats are most successfully elected in areas with high economic disparity and Republicans are most successfully elected in areas with economic homogeneity. One might imagine that this is because those who actually experience inequality see the folly of their actions and switch to become Democratic voters, and perhaps there’s some level of truth to this, but still it seems odd that the Democratic hold on a region strengthens as its inequality increases. In other words, they do better if their goal of creating a more egalitarian economy fails.

I was reminded of this reading an article this morning about a group of newly elected Democrats in the House who are from some of the nation’s wealthiest congressional districts. (Democrats now control 14 out of the 25 richest congressional districts in the country.) These congressmen are worried about a provision in the pending health care legislation which would fund much of the new spending with a tax increase of 1-5.4% on income groups making $350k/yr or more.

I don’t have an objection in principle to taxes that hit the rich harder than the poor. As was observed about the reasonableness of robbing banks (if one is going to be a robber): That’s where the money is.

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26 Responses to Basing Victory on Failure

  • “but still it seems odd that the Democratic hold on a region strengthens as its inequality increases. In other words, they do better if their goal of creating a more egalitarian economy fails.”

    About as odd, from another perspective, of doctors doing better when an epidemic breaks out.

  • It’s like the Republicans’ popularity rising whenever the U.S. gets struck by terrorism…even under the former’s watch.

  • My personal suspicion would be that the former is the explanation.

    Both.

  • But if the more doctors you got, the worse the epidemic became, might you after a while start to think that perhaps the doctors weren’t doing any good?

  • [I]t seems odd that the Democratic hold on a region strengthens as its inequality increases. In other words, they do better if their goal of creating a more egalitarian economy fails.

    I would tend to agree with Joe in not finding this quite so odd. MM pointed out a while back that Republicans tend to do better in states with higher rates of divorce, teen births, etc. I think you have the same phenomenon in both cases. Democrats say “elect me, and I’ll do something about the problem of economic inequality.” That’s likely to be an effective appeal if inequality seems like a problem to voters than if it doesn’t. Likewise, Republicans say “elect me, and I’ll do something about the decline in family values.” That appeal is more likely to resonate with voters if they think there has been such a decline and view it as a problem.

  • It’s like the Republicans’ popularity rising whenever the U.S. gets struck by terrorism…even under the former’s watch.

    Whenever? That would seem like a very small number of events to draw a trend from. Did Republicans gain support after the first World Trade Center bombing during the Clinton administration, or after the OKC bombing?

  • I’d certainly concede that to an extent, Joe & Blackadder. Though it seems to me that if one votes in Democratic local governments and representatives, and yet things still keep getting more and more unequal, one would have to start wondering after a while if the Democrats were actually good at reducing inequality or just good at appealing to both the rich and poor at the same time.

    It doesn’t seem like 30+ years of Democratic policies are able to help much in places like DC, Chicago, Detroit or New Orleans, but then, it may be that large cities in those regions are in bad shape for some unrelated reason.

    If it would help, I’ll consent to retract that side remark, since my main point was that funding all of Obama’s initiatives soley via taxes on the rich suggests both an intermittant revenue source and also a certain lack of faith on their part on the likelihood of their actually achieving greater income equality.

  • “Though it seems to me that if one votes in Democratic local governments and representatives, and yet things still keep getting more and more unequal, one would have to start wondering after a while if the Democrats were actually good at reducing inequality or just good at appealing to both the rich and poor at the same time.”

    Well, I am sympathetic to this point of view – Democrats have been, at least from the perspective of many leftists, been ‘moving to the right’ on economic issues for 30 years. The Bill Clinton years ushered in a “new” Democratic Party under the Democratic Leadership Council, and that is when much of this shift took place.

    Of course from a right-wing perspective, Democrats are still either socialists or close enough to. I think that’s a ridiculous assessment, having once belonged to a socialist organization myself – one that, like most other socialist groups, do nothing but complain about the Democrats (much in the same way, I might imagine, that people in the capital L Libertarian Party or Constitution Party complain about Republicans).

    “It doesn’t seem like 30+ years of Democratic policies are able to help much in places like DC, Chicago, Detroit or New Orleans, but then, it may be that large cities in those regions are in bad shape for some unrelated reason.”

    What did Democratic policies have to do without outsourcing, downsizing, ‘restructuring’ and all of the other processes that ushered in the disintegration of America’s manufacturing base that served as the economic backbone of these areas?

    Since I brought up socialism, I’ll paraphrase something Trotsky said about the Soviet economy – even good policies can’t turn manure into gold.

    “If it would help, I’ll consent to retract that side remark, since my main point was that funding all of Obama’s initiatives soley via taxes on the rich suggests both an intermittant revenue source and also a certain lack of faith on their part on the likelihood of their actually achieving greater income equality.”

    I also think this is a stretch, because few people narrow their vision of social equality to “income equality”. Wealth inequality or unequal living standards/conditions could be equalized – as they were in the past – by a transfer of wealth from the top to the bottom in the form of social programs without increasing anyone’s income.

    That said, I agree with you in substance – taxing the rich only isn’t a fair policy. Everyone needs to contribute to the common good. Those who have more, should contribute more and not complain about it. But even those who have less are obliged to contribute.

  • It doesn’t seem like 30+ years of Democratic policies are able to help much in places like DC, Chicago, Detroit or New Orleans,

    You can eliminate the “seem” when talking about New Orleans.

  • Oh, and there was not a complete collapse of our manufacturing base in those areas during this time…

  • “Democrats have been, at least from the perspective of many leftists, been ‘moving to the right’ on economic issues for 30 years.”

    That movement began to turn around with Howard Dean. With the ascent of Barack Obama, the far left of the party has the reigns.

    “What did Democratic policies have to do without outsourcing, downsizing, ‘restructuring’ and all of the other processes that ushered in the disintegration of America’s manufacturing base that served as the economic backbone of these areas?”

    These areas (DC, Chicago, Detroit, New Orleans) were in rough shape before outsourcing etc. The recessions in the 70’s were brought on by a lack of competitiveness (as well as some oil shocks) from which certain economic sectors (automotive, to name one) still suffer. The policies you cite were reactions corporations took to deal with the situation, and which exacerbated the local economic impact. Perhaps the question should have been “what did unions and corporations have to do with the disintegration of the U.S. manufacturing base?”

    “Wealth inequality or unequal living standards/conditions could be equalized – as they were in the past – by a transfer of wealth from the top to the bottom in the form of social programs without increasing anyone’s income.”

    As the IRS will tell you, the receipt of goods or services in kind is an increase in income. (They get rather testy if you do not report such things.) If you are talking about public libraries, parks, etc. it is another matter.

    Re the topic of the post, it may be helpful to view the “greed” map at http://minoroutside.blogspot.com/2009/05/bible-belt-or-swath-of-sin.html and compare it to a electoral map (such as http://elections.nytimes.com/2008/results/president/map.html)

  • people go into business to make money not to take care of the so called “poor.” you take a large enough percentage of money from the rich business man and he will try to move his business elsewhere where he can make more money. you tie up his business so he can’t move it, he leaves it accepts the loss and takes whats left of his wealth elsewhere.

    and you’re suprised…

  • Oh, and there was not a complete collapse of our manufacturing base in those areas during this time…

    In some cases. I’m not sure DC every had much of a manufacturing base, did it?

    At the same time, one might ask: What exactly was it that caused those manufacturing base cities to double down on unionized manufacturing repeatedly, allowing cities further south like Atlanta, Nashville, and Houston to grab so much of the more diversified economic opportunities coming available?

    people go into business to make money not to take care of the so called “poor.” you take a large enough percentage of money from the rich business man and he will try to move his business elsewhere where he can make more money.

    I’m not sure if this is part of what you have in mind, but one of the things that will tend to drive people’s profit motive harder in a highly heterogeneous society is that people do not necessarily trust the political arbiters of the common good to dispose of their money as well as they would themselves. Someone who wants to hold onto his earnings is not necessarily planning to blow it all on lighting his Cuban cigars with $1000 bills. He may be wanting to use that money to start an additional business (which will provide jobs) or to fund some charitable cause, etc. A desire to control what happens with the money one earns is not necessarily “greed”.

  • “people go into business to make money not to take care of the so called “poor.””

    And people avoid libertarianism like the plague when those who identify with it speak this way. The “so-called poor” – as if they didn’t exist. “To make money” – as if that in itself were a worthy goal.

    Catholic social teaching may not presume to insist upon what economic policies must be in place, but it certainly can insist upon the values that are to guide individual behavior and attitudes.

    Yours are in need of a serious adjustment.

    For Darwin,

    “Someone who wants to hold onto his earnings is not necessarily planning to blow it all on lighting his Cuban cigars with $1000 bills.”

    No one said it is necessary. That it is even possible, however, while people are suffering is a sufficient reason for the community and for society, through its legitimate democratic institutions, to have some say over what happens to the wealth of society. No one’s “earnings” are entirely their own anyway – the production of all wealth is a social process, and in the final equation, all things belong to God.

  • That it is even possible, however, while people are suffering is a sufficient reason for the community and for society, through its legitimate democratic institutions, to have some say over what happens to the wealth of society.

    I’d agree that this is why it’s appropriate for the state to provide a certain minimum level of safety net. There are those out there who, left the opportunity to use their wealth for good, will do nothing. (On the bright side, when they go out and blow it on a $500k sports car instead, at least they end up providing employment to a bunch of people, though certainly not from the goodness of their hearts.)

    In this sense, I certainly wouldn’t support absolutism libertarianism. At the same time, though, I lean towards wanting to leave people as much room to do the right thing as possible. So I certainly wouldn’t support a leveling approach to taxation where one intentionally tries to take all the “extra” above a certain amount.

    For an analogy: Many parents do not perform their duties very well. I think it’s appropriate that the community have a means of stepping in which bad parenting hits catastrophic levels. But I don’t think it’s a good idea when the wider community tries to relieve parents of most of their responsibilities in order to assure that no bad parenting takes place.

    Now, I’d say that the right to private property is of lesser priority than the right of a parents to rear their own children, so I think there’s more latitude, but I do think that there’s a very big element of charity and humanity which is lost when people rely on the polis as the primary means of assuring that people help each other and refuse to leave anything to the true solidarity of human persons. Indeed, I worry that an excessive reliance on the state’s “safety net” can end up feeding into the cycle of individualism which weakens community ties.

  • “On the bright side, when they go out and blow it on a $500k sports car instead, at least they end up providing employment to a bunch of people”

    I don’t mean to be snotty with you, but I really dislike this point when it is made in the context of trying to justify freedom to the point of license (that isn’t what you did here but the logic is similar).

    Pimps provide jobs. Drug dealers provide jobs. The abortion industry employs thousands of people. So does the abortion lobby. Excessive consumption and a squandering of one’s personal wealth on obscene luxury items might be a degree below these evils, but only a degree. It is certainly not closer to the morally acceptable end of the spectrum.

    A lot of people who would draw the line at prostitution and drugs, or at abortion, wouldn’t draw it at the squandering of vast amounts of money on the production or purchase of goods and services that serve only the purpose of personal aggrandizement.

    That they would draw the line at all, however, means that they admit that not all job-creating activity is valid, that some of it is harmful to society, to the common good. If you accept it in one case, I don’t see why it can’t be accepted in another.

    I believe social harm is done when time, effort, natural resources and other vital commodities are used up in the pursuit not of happiness, but gluttony. It is an injustice to the people of the Earth who are struggling to get by, it makes a mockery of God through idolatry, it tramples over the Church’s understanding of the universal destination of goods.

    It weakens the bonds of solidarity, it creates envy in the lower classes and a sick desire to emulate greed and perversion at the lower levels of society, some of it understandable and all of it undesirable. That people wish to produce something, and others wish to buy it, cannot in themselves serve as justifications for the existence of certain goods and services. And everything the Church teaches about consumerism, the evils of excess and global imbalances, and the preferential option for the poor proclaims as much.

  • I don’t mean to be snotty with you, but I really dislike this point when it is made in the context of trying to justify freedom to the point of license (that isn’t what you did here but the logic is similar).

    Pimps provide jobs. Drug dealers provide jobs. The abortion industry employs thousands of people.

    While I don’t deny that greed and conspicuous consumption can be sins, I have a really hard time with the idea that simply producing a very high quality good, of the sort that could command a very high price, would be sinful.

    Is producing a Baldwin moral but doing so with a Steinway immoral? Is it moral to work for GM or Kia but immoral to work for Masarati or Bentley?

    The idea that it’s moral to do something like build a car, but immoral to do it really, really well just seems odd to me. And I suppose that I can’t necessarily see how it’s moral for GM workers to work on a couple dozen vehicles a day, but immoral for Lamborghini workers to spend months working on one vehicle. Does the world suffer for there being fewer vehicle that are well made instead of many cheap ones?

    Which is not to say that I’d ever feel right about spending $500k on a car. But it seems oddly utilitarian to condemn a mechanic or engineer to want to build the very best car possible, a true work of art. Heck, at that point would the Church’s critics be right to condemn it for having spent so much money on patronizing the arts over the centuries?

  • I think we’re getting some wires crossed here.

    There is no reason a worker can’t do the best job in the world on an affordable car.

    And I suppose it is true that a car can be a work of art.

    What makes today’s situation different than the era during which the Church heavily patronized the arts, however, is that we can, at least technically, come within striking distance of solving some of the worlds problems related to scarcity of necessities.

    In those days, it wouldn’t have been possible in spite of the best of intentions. And the Church had her priorities straight – she was, for over a thousand years, the chief support of the poor and the sick. Patronization of the arts never came at the expense of those social duties.

  • “It doesn’t seem like 30+ years of Democratic policies are able to help much in places like DC, Chicago, Detroit or New Orleans, but then, it may be that large cities in those regions are in bad shape for some unrelated reason.”

    What did Democratic policies have to do without outsourcing, downsizing, ‘restructuring’ and all of the other processes that ushered in the disintegration of America’s manufacturing base that served as the economic backbone of these areas?

    Speaking as a Louisiana Guy little of this had to do with the downfall of New Orleans that has been under Democratic rule since Reconstruction

  • “Why build a program on an income base you’re intent on destroying?”

    Politics. Democrats realize that imposing taxes on the middle class, as they used to do regularly prior to Reagan, would be political suicide. The problem with their current approach from a Democrat perspective is two fold however. First, a tax the rich strategy only simply doesn’t raise enough revenue from the uber rich. Second, more than a few of the uber rich are Democrats. Many of them are screaming mad now when they suddenly realize that Obama is targeting them. Nothing like a better than 50% effective tax rate to convert limousine liberals to taxophobic conservatives, or at least to ticked off liberals who aren’t going to dole out donations to the Democrats the next election cycle.

    The Washington Post has always been a faithful mirror of what most prosperous Democrats are thinking. This recent editorial describes their discontent well:

    “But there is no case to be made for the House Democratic majority’s proposal to fund health-care legislation through an ad hoc income tax surcharge for top-earning households. The new surtax would hit individual households earning $350,000 and above. It would start at 1 percent, bumping up to 1.5 percent at $500,000 in income and to 5.4 percent at $1 million. The new levy would begin in 2011 and is supposed to raise $540 billion over 10 years, about half the projected cost of health-care reform. The rest of the money would come from reduced spending on Medicare and Medicaid — though the surtax for the lower two categories would jump by a percentage point each in 2013 unless the Office of Management and Budget determines that the rest of the bill has saved more than $150 billion.

    The traditional argument against sharp increases in the marginal tax rates of a very narrow band of Americans is that it could distort their economic behavior — most likely by encouraging them to put more of their money into tax shelters as opposed to productive investments. This effect could be greatest in certain states, such as New York, where a higher federal rate would add to already substantial state income taxes. The deeper issue, though, is whether it is wise to pay for a far-reaching new federal social program by tapping a revenue source that would surely need to be tapped if and when Congress and the Obama administration get serious about the long-term federal deficit.

    That moment may be approaching faster than they would like. Even if Congress pulls off a budget-neutral expansion of health care, the gap between federal revenue and expenditures will reach 7 percent of gross domestic product in 2020, according to the Congressional Budget Office. And that’s assuming that the economy returns to full employment between now and then. The long-term deficit is driven by the aging of the population as well as by growing health-care costs, both contributing to Social Security and Medicare expenses. There is simply no way to close the gap by taxing a handful of high earners. The House actions echo President Obama’s unrealistic campaign promise that he can build a larger, more progressive government while raising taxes on only the wealthiest.”

    Translation from Post Speak: “Hey Obama, tax those blue collars and hicks in fly over country and leave us wealthly liberals alone!” Obama’s election and the Democrats’ complete control of Congress are going to shatter quite a few illusions on the Left in this country, and the old tax the rich mantra is merely one of many.

  • Donald: I find it amazing that Obama told people before the election that he would raise taxes on the rich and now the rich Democrats who voted for him are dismayed because – he intends to raise taxes on the rich. As Glenn Reynolds says, “Who are the rubes?”

    More Americans will join the chorus of dismay as the Dems continue to redefine the meaning of the word “rich.”

  • Lots of socially liberal people voted for Obama without paying much attention to his economic agenda. Now they are and the howls will only increase as the economy sinks and taxes increase. Your quote from Instapundit is dead on Donna.

  • “Lots of socially liberal people voted for Obama without paying much attention to his economic agenda.”

    This is true.

    But the right didn’t pay much attention either, since they were constantly referring to it as “socialism”.

  • Well, Joe, it’s things like this that make me suspect our President is a bit further to the left than he let on during the campaign. He has named Van Jones as his “Green Czar.” And who is Van Jones? A LAPD officer posting at NRO online lets us know:

    “Jones was a co-founder of the Ella Baker Center for Human Rights, a San Francisco–area organization that once focused exclusively on so-called social-justice issues but now sees the pot of gold at the end of the green-jobs rainbow. In a 2007 entry on the Huffington Post, Jones marked the 15th anniversary of the riots that followed the acquittal of the four LAPD officers accused of beating Rodney King. Attached to the post is an essay he wrote in those heady days of 1992, which includes this account of the genesis of his revolutionary ardor:

    Our rallying cry was for justice; our demand was that the System be changed!

    Yes, the Great Revolutionary Moment had at long last come. And the time, clearly, was ours!

    So we stole stuff.

    Y’know, stole stuff. Radios, tennis shoes. Well, not everybody, of course.

    The vast majority (me included) just marched around and chanted slogans. But some set trash cans on fire. And smashed in car windows. And some kids stoned a few passing cars pretty good.

    And stole stuff, like I said.”

    Well, Abbie Hoffman did say “Property is theft,” a guy who sees nothing with stealing stuff will now be heading a government organization. At least, unlike most pols, he’ll be upfront about his thievery.

  • The “tax the rich to feed the poor” mantra is terribly defective from a pragmatic point of view.

    I know that many who post here prefer to speak from a philosophical or religious point of view, but it sometimes seems as though there is a disconnect between those points and the pragmatic. There simply MUST be a practical application to great thoughts or such sentiments, however valid, are impotent.

    The President says that we should levy taxes against the rich in order to force them to contribute to the greater good. However, America has tried to lean its social programs on the “rich” before and it has failed each time because wealth allows a person to “sit this one out.”

    Those of us earning more than the poverty guidelines and less than, to choose a number, $200,000/year are fully and directly engaged in the economy. We derive an income that leaves little left over after paying bills. We are on a treadmill and we cannot get off. Don’s point above gets to this reality – that we are “stable” tax payers because we will continue to earn and pay at a predictable rate.

    Those earning less than the poverty guidelines are far less “engaged” in the economy in the sense that their earnings often fluctuate wildly from year to year and are almost always entirely exempt direct taxation. Even if one WANTED to levy taxes on the poor, the only way to reach them is through taxes on the goods and services that they use. Joe’s point about “taxing those who have the money” fits their situation nicely.

    However, those earning over a certain amount – and it may well be $350,000 – enjoy a flexibility that the others do not. As has been noted above, they can manipulate their income and assets to avoid significant taxation. They NEED little that they purchase or use. Their interests more easily transcend borders.

    It is a mistake to think that one can tax the income of the wealthy and end up with anything close to the amount the government forecasts because, once one reaches the point of earning that much or acquiring that much in assets, tax avoidance becomes the consuming task rather than growing wealth. This means that they will, as they did on a large scale in the 1930s and the 1980s in the United States, shield their wealth while waiting out the Progressives.

    It is a simple calculation: If I am going to be taxed on income earned through investment, I will not invest. I don’t have to. They can’t reach my assets as easily as my income so I will “wait them out.” They will eventually be crying for me to invest again and will free me from those constraints.

    And so we have; each and every time.

    Simply stated, whether or not it is right or just to tax the high earners in order to provide social programs for the low earners is less significant a debate than the effect of doing so. It is THIS discussion that neither the Administration, nor the Legislature, is engaged in.

    How one can write legislation of so far reaching a consequence without analyzing its effects is beyond me.

  • “How one can write legislation of so far reaching a consequence without analyzing its effects is beyond me.”

    Because most politicians are far better at speaking than thinking, and once one removes the “tax the rich” panacea, hard and unpopular choices must be made by the same glib politicians.

Happy Tax Freedom Day Illinois!

Monday, April 13, AD 2009

taxes

I wish a Happy Tax Freedom Day to my fellow residents of the Land of Lincoln.   Here is a list of Tax Freedom Days by state. I enjoyed working for Uncle Sam and the State of Illinois up to this date, didn’t you?  It isn’t as if a lot of our tax money is being wasted as a result of blatant mismanagement and corruption.  Considering the new taxes on the horizon, certainly on  the state  level in Illinois, and  almost certainly on the Federal level, I suspect may of us will soon look back at our current tax feedom day with fond nostalgia.  Now back to work for me to earn something for my family during the remaining year.

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Of Tea and Taxes

Wednesday, March 18, AD 2009

dont-tread-on-me

In politics, as in physics, an action causes a reaction.  With the election of President Obama and strong Democrat majorities in both houses of Congress, the stage is set for a radical increase in the size, power and scope of government to transform the United States into a socialist state, along the lines of the European social welfare states.  The Bankrupt the Nation Act of 2009, erroneously called a stimulus bill, is merely the first step in the process.  The President has already warned of trillion dollar budget deficits as far as the eye can see, and he has the votes for now to carry out his vision.  Can he be stopped?

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7 Responses to Of Tea and Taxes

  • I hope there’s a debate, Donald.

    Vice President Biden during one of the Democratic primary debate said that he was astounded as to how much money is thrown into the election process and how much money people will throw to get a candidate elected, but we cannot raise the funds — either through government or private means — for issues like alternative energy, health care, education, and the like.

    I’d gladly pay more in taxes if the cause is worthy. I can’t speak for the rest of the country.

    Again, I’m glad you clearly outlined the need for a debate. I’ve never in my life agreed with Republicans so much, but just as I begin to reflect on it: am I really a Democrat? The answer is a resounding ‘yes.’ I agree with the GOP in the ‘no,’ but that’s what the Republican Party seems to be wrestling with right now. They cannot, in my view, be successful in the long-term if they run only as opposing Obama’s “out there” policies and then sweep Congress and maybe the presidency in 2012 with no plan of what to do. So, on the “no,” I’m with you and on the specifics of what to do, maybe we can begin the debate there.

    Good post.

  • Thank you Eric. The debate is really long overdue and I can understand why. It will be very painful to come to grips with fundamental questions of what government should do and how we will pay for it. However throughout most of our history we did just that and we must do so again.

  • Well, Donald, I think Gov. Quinn has just handed us Illinois residents an excellent warm-up exercise (in the form of his tax increase/budget proposal) for that national debate.

    In fact he explicitly asked the question you raise: if you insist on no budget cuts, tell us how you plan to pay for what you want; if you insist there be no new taxes, tell us what you plan to cut and why. I personally don’t agree with everything suggested in this budget, but the debate is, after all, just getting started.

    I presume similar debates will take place in other states, which also face severe budget shortfalls, but can’t print money or borrow from foreign nations to cover them up.

    I also believe that our current economic and fiscal woes, both at the state and national level, could perhaps be seen as our payback, penance, karma or whatever for our past electoral sins — voting for candidates who told us only what we wanted to hear, ignoring obvious corruption and incompetence, and adhering to party loyalty over principle.

  • Well said Elaine. In Illinois we are at a later stage in the debate than the nation is. We had the Build Illinois drunken sailor binge under convicted felon George Ryan (R.), or as many of us fondly deemed it, Bilk Illinois. Bloggo (D.), in addition to being a crook, was a lousy manager of the fiscal house of the State. Now the State is facing bankruptcy and so the best idea our government can come up with is a massive increase in taxes, sans the needed debate, thus far, on cutting spending. Crunch time is coming however, and this debate is going to take place in Illinois, in spite of the fact that most politicians would prefer to eat ground glass than to squarely address this fiscal nightmare.

  • It has come to this. The Porkapalooza Bill has forced a long overdue national debate on Gummint And Its Size. Reaches in all kinds of places- as in Philly Mayor Michael Nutter proposing temporary nudge nudge wink wink increase in property taxes to keep the swimming pools and neighborhood libraries open. Ignoring that the city’s population but a fraction of that two generations ago. Oh well no police or fire protection affected. But may come down to these points. What is necessary and what constitutes the category of Don’t Take Away My Teddy Bear. Happy to see our Washington Elite looking absolutely buffoonish in their efforts to demonize AIG. Spring is such a lovely time for protests. Had been the province of the sensitive and concerned over War In Iraq, Women’s Right to Choose, other stuff. This time, a different crowd with different beefs. Let the games begin.

  • Eric,

    They cannot, in my view, be successful in the long-term if they run only as opposing Obama’s “out there” policies and then sweep Congress and maybe the presidency in 2012 with no plan of what to do.

    While you won’t hear it on MSNBC or broadcast news, or the NY Times, the GOP has a health care plan, an energy plan, and an alternate stimulus plan, and an alternate budget. It’s unfortunate that the mainstream media doesn’t give the current opposition the play that the Democrats had under Bush.

    The Republicans certainly must find a way to get their message out that there is a BETTER way than selling our future, which is precisely what the Democrat tax and spend policies will do… slower economic growth and rising inflation for many years to come, with the tax the rich limitations slowly or suddenly dropping from 200k to 25k… We’ll be in the doldrums unless this is halted and reversed VERY soon.

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Don't Make It Hurt

Monday, March 2, AD 2009

So here’s an argument against irreducible complexity.  Take a family that works hard for a living, saves a large chunk of its earnings for old age, emergencies, sending kids through college, and so on.  Then create (through some combination of amino acids and other proteins) an institute that offers insurance against disaster.  The family, being prudent, realizes that the insurance, while it costs them a little more each month, could potentially save them thousands of dollars in the long run, and so it buys into the insurance company.  Now introduce a mutation: the family decides that since disasters are covered, they can divert a little more money into luxuries. Repeat this process with a health care institute that helps cover the soaring prices of medication; a loan agency to cover college tuition (which is steadily outpacing what the normal family can afford); a loan agency to cover the cost of a business; a house; a car; anything at all with the swipe of a plastic card with a magnetic strip.  With that final mutation, we now have a system in which the removal one component causes the whole organism to fail, and yet was built up by increments.

Nearly half a year after the great crash that marked our current recession as one of the worst in decades, we are still bleeding.  Our economy continues to shed jobs; the stock market wavers, falls, stabilizes, wavers, and falls again; big businesses, like the insurance titan AIG, continue to need billions of dollars of bailout money just to survive; and the government continues to scramble to pass legislation that supposedly will fix all our problems, but in reality will simply make matters worse.  The gigantic stimulus package was laughable (in more a mad, gibbering, hysterical laughter than a ha-ha laughter) in that hundreds of pet projects suddenly found funding, but precious little in the bill actually targeted economic stimulus, and much of the spending won’t happen immediately.

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16 Responses to Pop Quiz

  • “Our taxes going to the needy, however beneficial it might prove, is an abrogation of the human will towards charity. It not only bereaves us of the choice of where our money goes, but it also stunts the growth of charity in our souls.”

    That’s funny!

    You caricature the Right very well…

    “As a note, Senator Obama—like many on the left—seems to have little to no faith in human charity.”

    I know. Does not he see how little the poor need anyone beyond individual givers, uniting outside of the government? Case in point. Latin American countries under right wing dictators…the usa…

  • Did you use the Acton-Cliff Notes?

  • So Mark, do you believe the populace at large incapable of charity? Or if not, perhaps you can enlighten us as to how exactly we’re supposed to provide for the poor.

    Frankly, I can’t see how leaving people with their money to choose to spend/donate as they deem right is a bad thing. Even if they waste the money on trinkets or fast food, that’s jobs for people. Take that money away, that decreases the number of jobs available, which makes more poor. Handouts don’t cover what a steady job can provide.

    But you might have a different viewpoint. Please, enlighten us.

  • I personally know someone in my family who made some unwise decisions, got pregnant, lost her job and healthcare insurance for not being able to work (her healthcare was attached to her job). The man who got her pregnant is a deadbeat. So, she set her eyes on abortion. Luckily, she has a pro-life Catholic in her family and together, we made the decision that she shouldn’t do that.

    She’s received about 200 dollars a month from the government on unemployment. Many in our family contributed what they can to assist her with her baby that was born in July.

    My point? There was no way that this “redistribution of wealth” in anyway really changed the playing field. Or, what if that “redistribution” made it easier for people to be like me — the first in an entire family to go after higher education. It costs $30,000 a year to receive the education I do. My mother makes just about that much in a year. How many youth with potential are barred from going to school because of skyrocketing costs?

    It seems to me that even if I knew that the government would be assisting people, it would no in way bar me from doing charity. I think the notion that the government doing some of the work will prevent people from doing charity is absurd. The reason people don’t give charitably is selfishness — it’s not because someone else is doing it. Would you stop giving to charity? Would you not stop to help someone because the government gave them a few measely dollars that hardly enables them — even stretching the money — to live even comfortably in this society? Do you remember when minimum wage was $5.15? Have you ever watched a family struggle making it by on such a salary?

    Obama seems to have little faith in human charity. Maybe. But as far as the rich giving to charity, the amount they give is hardly a dime in terms of the money they have. What is $2 million dollars to Bill Gates?

    Moreover, I dare to ask how fair is the economic system we have. It’s fundamentally social Darwinism — survival of the fittest. It’s a system of unrestricted competition and it’s the very reason why a small few can set a monopoly on money and get richer, usually without doing anything. Perhaps, all it takes is nothing but an investment.

    But how is such a system that is naturally disadvantaged to the poor and lower middle class really compatitible with the Catholic faith? It’s not a natural law approach to anything. It’s a consequentialist ethic — which is in itself moral relativism with another mask. What is good in terms of business usually has more to do with profit, shareholders, and prosperity of that particularly business than with the human dignity and welfare of society. Ultimately, we’re banking on the moral uprighteousness of the private sector just as we’re banking on the moral uprighteousness of the government. All of mankind is fallen from sin. Why should we trust one over the other? Why is one method so much superior to the other?

    Sure you’ll disagree with me, but I think it is something that Catholic Social Teaching is entirely consonant with political conservativism. But political liberalism, or “socialism” is just bad business all over the place. If I’m not mistaken, Catholic teaching is beyond “left” and “right” politics. And though the issue at hand is not “non-negotiable” and thus we can have legitimate disagreement, we’re not both right. Or maybe we’re both wrong.

  • Eric,

    Excellent response, and tough questions to address. I don’t believe that government spending on the poor destroys all charitableness, or that the government shouldn’t spend money to help others. But I do think that government handouts have a tendency to harden hearts towards those receiving handouts, especially here in the U.S. where there is such a culture of individualism that we tend to look down on people in need. Indeed, I struggle a lot with the question of how we can justify railing against higher taxes when there are people in need. Aren’t we just struggling futilely to cling to material wealth, wealth that ultimately means little in the long run? My problem, ultimately, is not whether or not the government should send some tax revenue to aid the poor, but how much it should tax others to do so. How much is enough, and how much is too much? Frankly, if tax cuts increase federal revenue, then why speak at all of “raising taxes out of fairness” even if it means less federal revenue to spend on welfare?

    But the problem of charity is a real one. Certainly there is a problem when half the people you talk to complain about “lazy good-for-nothings, feeding off the government”. Does this mean that the government not giving out welfare will inspire charity? Not by any means. But I do believe there’s a point where the government takes so much and hands it back out to so many others that it starts to wound charity in the hearts of those who are taken from.

    I fundamentally disagree that our economic system is naturally disadvantaged to the poor and the middle class. Maybe that’s because I come from a middle class family, and am in third generation receiving a college education. Maybe it’s because I come from Wyoming, which has very few minorities, and thus I don’t see the discrimination minorities suffer from. Maybe it’s because in Wyoming, you can always work construction, the oil fields, or the coal mines, and make more in a year without a high school diploma than most college graduates make. Or maybe it’s because I’ve seen my father work hard and build a small accounting firm, and has risen from making barely $30K/year to over $60K/year. Maybe its because my family was willing to offer a friend of mine free housing, food, clothes, and even a car for cheap in an effort to help him make it through college. And that friend started from a poor “white trash” (he’ll admit the white trash if you ask him) family, most of which is still in the gutters, not because they can’t haul themselves out, but because they keep wasting all the chances they get.

    The way we think things work undoubtedly comes from what we see growing up. Eric, I’m not sure what all difficulties you’ve had to face in your life, so I can’t necessarily appreciate where you’re coming from. But when I look at the economic system we have, I can’t see a better system for providing the poor with opportunities to rise out of squalor.

    Wealth tends to concentrate on a small percentage of the population? That doesn’t bother me any. Most of those who are wealthy worked their way to it. I think it is a fundamental prejudice to suggest that the rich don’t do anything to earn their wealth. I’ll agree that some don’t, and I’ll agree that some get rich quickly from dirty methods. But those are a scant few among the other hard-working, successful people.

    I could rant about this for hours, but I have work to do, so I’ll let it go there, without having said anything of substance. And I do understand very well the story of the rich man who donated a lot of money to the temple, but only a tiny, tiny fraction of what he had, and the poor woman who gave up her last two talents, and how Jesus praised her before his apostles for the sacrifice she made. There, at least, I can readily agree with you.

  • One interesting group to look at in this regard is the Amish. They refuse both social security, medicare and any form of private insurance because they believe such approaches do not constitute truly “being your brothers keeper”. Instead, each Amish community has its own emergency fund. Everyone is assessed, according to his means, to pay into that fund, and the fund then pays out when families run into problems (medical or otherwise) that result in expenses they can’t meet themselves.

    Now, here’s the thing: Even the most well off know they need to contribute to that fund, not only in order to avoid social and moral ostricization, but also because they know they have no other recourse. If the rich Amish bought insurance, but everyone was supposed to pay into the community fund to help the poor ones who couldn’t afford insurance — I would imagine that it would be a lot harder to get everyone to chip in. People would still have their charitable impulses reinforcing the need to help with the community fund, but their sense of self interest would no longer reinorce that impulse.

    Not that I’m saying I’m eager to give up my insurance…

    What I do think it can show the rest of us, however, is that getting people to participate in charitable/solidarity actions at a serious scale (not a hundred spare dollars once or twice a year, but enough to really cover the needs of those without their own means) relies on a sense of urgent need. If your self interest is brought into play because you rely on the same community fund, that gives urgency. If you know that there are no other options out there, and so if your parish (to pull an example) doesn’t put together a significant scholarship fund, than many of the students from poorer families will simply not be able to go to college — that gives urgency. But if one has the general feeling that there must be an awful lot of programs out there (private and public) already meeting a given need, there’s not much sense of urgency and people tend to keep themselves to themselves.

  • Ryan,

    I’m not convinced that tax cuts increases federal revenue, in fact, I think the opposite. It’s heatedly debated in political circles. But that’s not our interest here. We’re concerned on how we as Catholics — even as we disagree — can transform the political landscape with millions of other people with whom we agree and disagree. That’s the challenge. Personally, I’m all in favor of the FairTax. But that’s not the current tax system.

    I believe that the government has moral purpose. How the mechanism is used is the fundamental question. It’s difficult to answer. I’m not sure I agree with people having a hardened heart in receiving government “handouts.” I’m sure there are plenty who are grateful. It seems to me that if we had a system where people could receive needed assistance for a specific amount of time — in other words, a transition period — with information forwarded to them to aid them in finding a job and provided evidence that they are searching, I think we would be better off. This would decrease dependency dramatically and encourage self-sufficiency.

    It also seems to me that there are shades of the culture of individualism in saying “this is my money and the poor shouldn’t get it unless I say they can.” People of that sort don’t seem to care for charity — either through the government or themselves. Now surely this doesn’t account for the majority of conservatives. Nevertheless, the question of how much the government should help is one of prudence and that’s not definitively answerable.

    I do share your concern that the government giving out too much can have an adverse effect to some extent. I’ve been in the car with friends who say when they see a homeless person, “the government really ought to do something to help him.” But I don’t think that the lack of charity is contigent on the fact that the government is helping people, but rather it inadvertently reaffirms the lack of charity and moral disordering (for an ordered morality demands charity) that already exists in their own life. And I don’t think that we can avoid doing as much good as we can through the mechanism of the government (without the State exceeding its boundaries) for the sake of unintended consequences. It’s like not standing up against injustice because one fears that it’ll cause an unwanted backlash.

    In terms of our economic system, it depends on if its an unrestricted free-market or a free-market with a few minimal regulations. I favor the latter. I think the former does naturally give advantage to the upper middle class and the rich. I think that there are opportunities for people to rise out of poverty, but I attribute it more to God’s grace than to the system itself. I’m not entirely convinced that most of the wealthy worked their way to it. Just at my school, I see kids with a silver spoon in their mouth who in many ways are totally ignorant of the plight of others. Their parents can easily and readily afford college. Many of them have gone to private school their whole lives–some with tuitions just as high as their college tuition. They are born with all the support they need and with many advantages. What about children born to parents who aren’t as well off?
    Supposedly 60% of the bottom of the socio-economic scale is comprised of single parent households. Statistically children raised in such environments are more likely to do drugs, drink alcohol regularly, to drop out of school, to repeat a grade, to be sexually promiscuous, and the list goes on. I was born into the place on the scale. My grandmother who is 75 years old, to this day works, cleaning houses for two different families. One of which she has worked for her entire life (my grandmother’s family always worked for that family and I believe generations ago was “owned” by that family). The family she has worked for the longest is very wealthy. The lady — Mrs. Moroney — is a very liberal, pro-choice Democrat (she supports government intervention). She also happens to believe in me so much that she is willing to pay all remaining costs of my education — out of pocket — which has totalled over $30,000 by now. This was all generous charity and I am very grateful. But I ask myself to question — of the thousands of people that are born into a similar situation as mine, how many receive the same blessings?

    I’m not saying “let’s have a mass government ‘hand-out’ party,” but that there is some merit to the government assisting people. And yes, I’m looking at all of this through the lens of my own life — and I’d like to think through the lens of the lives of other people who won’t share my blessings. I find it very disheartening when things are just classified as “socialism” and dismissed. It really cuts off rational discourse and creates the endless culture war — this clash of orthodoxies — that we’re experiencing and are all frustrated about. Many Democrats, myself included, aren’t in favor of equal results in life. That’s not realistic. But we do favor an equality of opportunity and currently — and I don’t think anyone would argue this — there is a large disparity in the socio-economic ladder that makes this very difficult. Thus, people should be provided the resources they need — public and private — to help them achieve those means. No, we shouldn’t just subsidize it and give them a free ride and teach them that a lack of personal responsibility is alright; it isn’t.

    But I think a safety net that relies solely on charity in the western world is a recipe for disaster. It won’t happen. And the worse our education gets (its happening), the worse our morals get (its happening), and the more we’re all geared for ruthless competition with one another, we will fall. We’ve got to help as many as we can and I think it requires — at least at this point in history — that the government be involved. That’s my perspective.

  • Ryan,

    Would you say that the Amish system is an honest example of the doctrine of subsidiarity and distributism?

    Just a rhetorical question from a die-hard free-market capitalist just learning about Catholic teaching on economics and rethinking his position.

  • Eric,

    As a quick note, I might have been confusing about it, but the “hardened hearts” refer to the people seeing others getting handouts, paying their income into handouts, not the people receiving the handouts.

    I see the growth of government as a necessary effect of the decline of the morals of the populace. As people become less inclined to take care of themselves, the government has no choice but to step in a fill in the gaps. So to some extent I agree that government-funded welfare is a result of uncharitable hearts. I do feel that there’s a feedback in the system, though. As charity decrease, the role of the government increases, further justifying reduction in charity, forcing more government increase, and so on.

    But government exists to be a safety net, so I will never argue against the government providing safety nets. Government exists to protect us from outside threat. We could, perhaps organize that on our own with a bunch of independent militias, but it would be ineffective. Thus it provides a safety net there. Government exists to protect our rights from impinging neighbors. While we might have some success dealing with matters privately, and privately should be our first recourse, the courts exist as a safety-net to assure our rights are preserved. (I just wish they would stop inventing rights at the drop of a hat.) And these are cases that don’t directly touch upon the economic issue we’re talking about. Yes, we cannot count on safety nets that rely solely on charity. That, I believe, is actually called anarchy.

    The government first and foremost has to respect the human dignity of those it governs. Included in human dignity is industry, and compensation for labor. Thus I agree with government policy that regulates the markets so as to prevent monopolies and unjust wages. Thus I also agree with taxes, for I see the government as a body of people also deserving in compensation for their labor.

    The government has the ability to steer us through particular market forces, through taxes and subsidies. It can introduce artificial demands and artificial supply restrictions. And in do so, it can throw the market out of whack.

    Let’s consider colleges, for example. The cost of college is high, true, but its purpose is also to provide a further education and qualifications that make an individual valuable for some select positions in the market. Not everyone needs to go to college. Others can find themselves quite content with trade jobs or as laborers. Not everyone wants to be an executive. I agree, though, that having a college education gives one quite an edge in finding a nice, comfortable, high-paying job, and that many people who would be suited for those positions don’t get the chance because of financial considerations.

    What happens when we subsidize college education? The demand for college increases, as we’ve seen. We’ve struggled to send as many of our youth to college as we can, which in turn increases the demand. The demand is especially for prestigious universities. So what happens to the cost of attending? It goes up. On the flip side, a college needs students for a large portion of its funding, especially private universities that don’t receive state or federal funding. So more students means more funding. Except for the need for more facilities, more professors, more housing, more equipment, and so on. The net result? A mess. Usually the cost of attending continues to soar. At least, that’s how it has been at the University of Wyoming, and this little state university is one of the least-expensive to attend in the nation, even as an out-of-state student.

    Saying that, of course, calls my attention back to your silver-spoon students, who had no clue of the problems people around them suffered. Extrapolating from Wyoming probably makes me one of those, doesn’t it?

    “No, we shouldn’t just subsidize it and give them a free ride and teach them that a lack of personal responsibility is alright; it isn’t.”

    What is the right balance between providing, and enabling sloth? The problem, of course, becomes that the further away from the beneficiary you are, the less capable you are of making that decision. That’s why I feel government should be a last resort, and that family and community should be the first responders. They’re the best ones to know what you need (statistically speaking, anyway).

    To use your benefactor as an example: God bless Mrs. Moroney for her generous donation. Her example definitely supports what you said before about government intervention not preventing charity. But she also, by your very words, justifies my position. She knows you, knows your needs, believes in you, and thus has made a contribution. (You can burn me if I’m speaking out of line, too personal, or such, or if I’m just flat out wrong.) She wouldn’t necessarily do that to someone off the street because she doesn’t know if such a contribution would be worthwhile, what that person actually needed.

    Back to the college example, we don’t know if everyone needs the opportunity to go to college. For some, maybe going to college is the last thing they need. It certainly is telling when you provide a college education, practically free of charge, and many students simply flunk out for lack of care. Maybe it makes more sense to make the last two years free of charge as opposed to the first two. Federal Stafford loans already reflect this: the further you get in college, the more you can borrow.

    The problem I have is that too many of the policies suggested smack of eating the whole harvest without preserving seeds for next year’s planting.

    I would ask, then, what do you view as the ideal economic policy? How would you craft things so that everything works perfectly? I don’t ask this to be flip, but as a serious consideration. For a long time, I was very Ayn Rand-ian about unregulated free markets (while my sister was very, very Marxist, go figure). But I’ve migrated from the radical end to feeling that regulated free-markets, with government safety nets to assist those who fall through the cracks in the market work well. I might go a little further left of that, if convinced, but I cannot see any other economic policy in existence that provides the poor with as many opportunities.

    One thing that always caught me was this. Suppose we all stopped eating fast food and donated that money to charity. Well, that would nice at first, except it would put some 10 million people out of jobs, needing more charity. So suppose we cut out other luxuries in our lives and donated that money to charity. That’s more money given to the needy, but more people out of jobs, too. Keep following this line of thought, and suddenly we have huge unemployment and nowhere near enough money to help everyone. That’s why I was for a long time a follower of Rand’s “Virtue of Selfishness”.

    But then there’s the catholic concern about God and mammon. That’s what changed my mind. Economic growth is important, because it is far more beneficial for a poor man to have a job than handouts. But we can’t subscribe to Rand’s selfishness, because it is selfishness itself that causes the corruption in the markets. And addressing immediate crises in human lives is more important than keeping economic growth high. Putting the growth of capital over all other considerations is just as evil as socialism. But certainly, there has to be some concern about economic growth. I just haven’t figured out the right balance, yet.

  • Tito,

    I would. And the distribution here doesn’t bother me much because it is down at a community level. What worries me about government redistribution is that it is impersonal and wasteful. The thing is, I have no problem with saying that the rich have an obligation to assist the poor. Ideally, I would like that to remain between the rich and the poor without any government intervention. Of course, thing’s don’t work that way.

  • Ryan,

    I was thinking the same thing about distributism. I like the concept, but at the smallest nuclear stage as possible.

    Being raised in a very small town in the middle of the Pacific, I can see this model working well in a neighborhood setting as opposed at the federal or state levels.

  • Ryan,

    You’re misunderstanding me. I can’t answer you point by point, so let me hit a few points. Since we’re talking about the United States, when I say “government,” I’m not necessarily saying the national government. If something can be taken care of at a more local level, then it must be done there first if it can be just as efficient. Therefore, the city government or individual state governments — in my view — bear the responsibility of providing a “safety net” without going beyond its own means. I’m very much in favor of state and local governments providing assistance first to avoid the creation of unnecessary bureaucracies. Moreover, the farther away from the situation one gets, the less pressing it is and the less efficient one is at managing it. So, I think there is a way one can honor the principle of subsidiarity while seeking other principles of Catholic Social Teaching such as preferential option for the poor and vulnerable.

    I think such a half-way measure allows for much common ground debate instead of the polarizing back and forth, endless system of liberals vs. conservatives. Why? Liberals initiate new programs, seek to fund older ones that are falling apart, and they tend to do it especially while having a majority at the national level. In comes the conservatives, they deregulate, cut taxes, cut programs, etc. It goes back and forth and the tug-of-war effects the economy and many who are on the receiving end of such things.

    In my view, human dignity must trump economic growth. A respect for human dignity usually leads to some sort of solidary and community–which usually doesn’t allow for economic collapse. A lack of respect of human dignity leads to a cold machine of unrestricted free-market capitalism, where what’s good for the businesses is good for everyone (which really means almost everybody) and it’s based on a consequentialist ethic of right and wrong, which as I have said, emphasizes profits and shareholders over public interest and I don’t see how this is at all compatitible with Jesus’ teaching. However, to be fair, there must be a working economy if we’re going to be able to help those in need and therefore, the regulation by the government has to be kept to a minimum and this is why I support doing it, as much as possible, away from the federal level so that regional or state problems are solved within the state and only assisted federally if it is necessary.

    There is no such thing as a perfect economic system. But I believe that a free market that has “common good” oriented regulation that is kept to a minimum, without handicapping the market, I think is most effective. But that’s my view and I’m not absolutizing it anyway. Though, I don’t think I’m fundamentally wrong. For example, in regard to minimum wage laws the reason that the Bishops support it is because there have been cases of people being employed for wages that are not sufficient to live decently in our country, particularly to provide for one’s family. Making $5.15 an hour is ridiculous (the current wage is $6.44, I think). Now, arguably, it might have been better for each state to deliver a different minimum wage law, but nevertheless be required to have one could have been a common ground solution. Surely it’s cheaper to live in some states than others. But the fundamental recognition in law that there has to be some relative wage that is fitting to the economic situation of our country that respects human dignity should be established.

    Now in regard to education, you have some good points. But I’ll just point to Texas. I live in a state that is predominantly governed by conservative policies because everyone votes for Republicans. Every fiscal year when we start cutting the budget, education is usually first in line. So in places like “third ward” in Houston, which is essentially a ghetto of blacks and hispanics — the schools are run down, underfunded, science labs have no equipment, teachers are poorly paid. The cost of college as you mention is rising. All of this, but we’re having an 11 billion dollar surplus this year in Texas.

    In my view, it’s not simply the money that’s required, it’s the priortizing and the budgeting. Clinton ended his presidency with four surpluses and a deficit of 5.63 trillion dollars. (I’m not saying that he deserves all the credit — he doesn’t). When Bush leaves office, that deficit will have about doubled. We’re fighting a war that requires us to borrow $10 billion dollars a month. On a side note, over half a million Americans die from various forms of cancer and we spend about $5.5 billion on cancer research. That’s not even a month in Iraq.

    When political conservatives take office, funding for public education and financial aid for students are first in line to be cut and money is delivered elsewhere. So in my view it’s not entirely about cost (costs do matter) but when it comes down to what matters, what doesn’t, what’s more important, and what isn’t, is when I begin to go liberal. I think a lot of problems could be solved if our priorities in our budgets were different.

    And what I really want to get at here is that I’m talking here mainly in theory–sort of like a framework. The approach liberals take, I generally agree with. Now are their policies and tendency toward nationalizing some matters an immediate consequence? I don’t think so. I’d argue that I’m “liberal” and other self-identified liberals sometimes aren’t. Just to give an example or two. If liberals really cared about the weak and vulnerable, they would oppose abortion. If liberals really cared about personal freedom, then they would support transitory welfare systems with strict limits so that Americans don’t become ultra-dependent on the government for survival. In that way, I can argue that I’m adopting a more faithfully “liberal” position.

    I think it’s fair to say — as usual — we agree, more or less, on principle and not on policies.

  • Eric,

    I feel I need to go paragraph by paragraph here…

    P1) Good to get on the same page. I was thinking you only meant federal government. Now that that’s cleared up, with you 100%.

    P2) Still 100%

    P3) Still 100%. I really think that full respect for human dignity and a thriving economy go hand-in-hand, that the second naturally springs from the first. Yes, human dignity must indeed trump economy when it becomes an either-or situation. I think we only differ on when that happens. Maybe the how, as well. We’ll see.

    P4) I’m only cautious about the minimum wage thing. That might be because in Wyoming, in most cities the cost of living is cheap. (Not in Laramie, where college students drive housing prices up, or in Rawlins, which is struggling to house a massive number of construction workers, or in Jackson a.k.a. “Little California”.) There’s a lot I could say about minimum wage, and it reflects back on immigrant workers that cram together in a small house, only staying there to sleep, essentially, as they struggle to make ends meet. But then, I don’t know if finding roommates to help split the cost is a good idea or not, giving the potential of abuse. And I suppose, reluctantly, that it makes sense to index minimum wage against inflation, but minimum wage is minimum wage for a reason. It is the wage that says “I have no skills, yet”. I’d rather see a bill mandating a certain amount of raise every so often than a bill raising minimum wage. Your thoughts on that?

    P5) To fix education, we have to fix our public schools and the success of our students there. I have no good ideas of how to do that. The cure, I don’t think, is as simple as throwing money at the problem. Do you think Texas might be willing to have recruitment of public school teachers on the level that it recruits football players? Get all the public schools together and have a draft of potential teachers, of which stats regarding each one’s teaching ability are publicly known? I’d definitely be willing to distribute some of that $11 billion surplus to help each school acquire teachers up to some set salary cap.

    It seems to me that fixing college, or making college available to more and more people, does little unless we actually make our public schools quality schools again. But then, I’ve also heard that a lot of failing schools are failing due to cultural reasons, not financial ones. Do you know or have any experience with this?

    P6) Priorities are going to be a place we differ. All I can say about your example, though, is that cancer is something that plagues all mankind, the Iraq war that is primarily an American and Iraqi problem. The problem I have with the Iraq War right now, and ever since the terrorists decided to make Iraq the central front, is that the Iraq War seems to be a low priority thing, even with all that we seem to be dumping into it. It doesn’t feel, to me, that we’re taking the war seriously. If we had really been serious about it, ramped things up to the levels of previous wars, I think we’d be out of Iraq by now. And since we thought we could fight Iraq in our spare time, I don’t think we should have gone in in the first place. I guess maybe I would amend what you have to say, then, is not just priorities, but commitment to them. Enough half-baked ideas or empty promises.

    P7) Makes sense to me.

    P8) I talk in theory a lot, too. My field of research is theory. Mathematics is about as theoretical as you get. So don’t worry if you’re getting too theoretical.

    P9) I think, between us, we could hammer out an acceptable policy. Let’s try to have one drafted up to present to the next president, whoever he is!

  • Ryan,

    In regard to your first question on minimum wage. Currently, minimum wage laws are done from the federal level. States can raise the wages higher, but cannot be lower than the federal mandated minimum wage. The notion of a “living wage” was introduced by Pope Leo XIII against the excesses of laissez-faire capitalism and communism. The Holy Father affirmed the right to private property while insisting on the state requiring a living wage. In essence, private property requires state protection and a certain dimension of the common good requires state regulation. Thus, minimum wage is a set legal stature by which the state mandates that all workers be given a “living wage,” which is necessary for a person to achieve a humane standard of living–a person should be able to afford quality housing, foods, utilities, transportation, health care, and minimal leisure.

    Some excerpts of Rerum Novarum:

    “If a worker receives a wage sufficiently large to enable him to provide comfortably for himself, his wife and his children, he will, if prudent, gladly strive to practice thrift; and the result will be, as nature itself seems to counsel, that after expenditures are deducted there will remain something over and above through which he can come into the possession of a little wealth. We have seen, in fact, that the whole question under consideration cannot be settled effectually unless it is assumed and established as a principle, that the right of private property must be regarded as sacred. Wherefore, the law ought to favor this right and, so far as it can, see that the largest possible number among the masses of the population prefer to own property.” (#65)

    “Wealthy owners of the means of production and employers must never forget that both divine and human law forbid them to squeeze the poor and wretched for the sake of gain or to profit from the helplessness of others.” (#17)

    “As regards protection of this world’s good, the first task is to save the wretched workers from the brutality of those who make use of human beings as mere instruments for the unrestrained acquisition of wealth.” (#43)

    How the state ensures a “living wage” can have a variety of forms, I imagine. The most common method is through minimum wage laws. Obviously, I support minimum wage laws. Given the unique structure of the American political system, I don’t think minimum wage laws — as I’ve said — have to be legislated on a national level. Since each state has its own economy, since the price of living in Alabama is not the same as the price of living in New York, then it seems to me preferrable that minimum wage laws still be made, but by the state rather than federal government. That way, the minimum wage in New York or California (places where it’s relatively more expensive to live) be higher than the minimum wage in Louisiana or Nebraska where the cost of living is notably lower. Giving differing state economies, it is more reasonable to not have an across the board minimum wage law. That’s my view on that matter.

    In regard to education, I don’t think we disagree much. We spend more money than any other industrialized nation in the world on education and we have a poor quality of education. One thing — we’re also a much larger country than many others and we have a profoundly different system. So in some ways, I think it’s not always good to compare. There is a need of money, as I noted with schools with outdated textbooks, lacking scientific lab equipment, and poorly paid teachers.

    One thing I think is the emphasis on athletics and not on academics, particularly in the south. The other is the shortage of teachers. Teachers aren’t paid well for all the work they do. A lot they do for free (e.g. staying after school to tutor students for hours). One thing is that education needs to be the item on our list that doesn’t face routine budget cuts. Huge surpluses and problems in our education system such as the ones we have, don’t make much moral sense.

    On the matter of proving the quality of education, I agree entirely. I’m in favor of all but abolishing standardized testing. All it does is gear the entirety of one’s education toward remembering facts to pass some test. The emphasis in education should be on writing well, thinking rationally and critcally, and being able to articulate clearly and synthesize ideas coherently. This usually curbs one’s tendency toward relativism because many of these tenets are present in a liberal arts education.

    Education is also suffering because of at home issues. Students in single parent households are likely to do poorer in school than those who have a traditional family setting. Some parents (Asians especially) are more interested in their children’s academic success than other ethnic groups (African Americans and Hispanics especially). This needs to be a factor that influences our approach to education so that this isn’t a cycling, never-ending reality. The people who grow up to vote, to effect the morality of our country and our culture, come through the education system. There will always be some failing at home and if there isn’t a “safety net” of some sort in the education system to limit cultural and moral relavitism through educating people away from that, we’ll continue to have problems. I suspect in retrospect that one of my high school teachers was a Catholic and that he geared me away from such forms of thinking. Surely, an aversion of relativism isn’t contigent on one’s being Catholic, but simply on being rational (so it’s possible to achieve). After all, everyone who approaches the abortion debate with a poor understanding of morality (and the ‘answerless’ question of when life begins) came through the American education system. It’s why I think it is so fundamental.

    In regard to priortizing issues, I was merely pointing out the fact that it seems that our priorties are misplaced. For someone who calls himself a “liberal,” I think most liberal methods in international policies are severely flawed. To give one example, sending millions of dollars to African governments to help people is commendable in intention, but in policy it doesn’t work. To send money through the machinery of a corrupt government is to waste money because it’ll never reach the people. There is a sufficient amount of food in Africa, it just isn’t distributed justly. I’ve been told (so I’m not sure if it’s true) that the government stores food up and keep it from its citizens. So we have to find more creative ways of dealing with these morally-pressing problems besides throwing American money at it. Essentially, I’m bad mouthing putting more financial power on foreign rather than domestic issues. Cancer was just the example I used. And I too agree that much of what we do, we do half-heartedly, which is an essential ingredient to its failure.

  • Eric,

    I’m ambivalent about standardized testing. For the one year I tested the waters in the college of education, I was exposed to a lot of prejudice about how schooling is to be done. Standardized testing is bad. Dividing students up into tracks is bad. Lots of projects that span many subjects are good. Lessons should be tailored so that the brightest and slowest are each engaged and learning. Grades should be based on rubrics, not the 100 point or A, B, C, D, F scales. Some of these points I agree with, others I don’t. One of my presentations was on standardized testing, and because the prevailing attitude was so negative, I tried to put as much positive spin on it as I could, and I couldn’t muster very much. (Even so, everyone thought I was a crazy conservative who was gung-ho on standardized testing.) But the question becomes, how do you ensure that certain benchmarks are met, that students are actually learning what they need to learn?

    The problem, like in all other areas, is the human factor, especially with teachers. Do we trust all teachers when they say that students have learned what they need to learn, or do we have some other measurement to go by? We can probably trust good teachers, but what about bad ones? But then, how can we trust test written and graded by people who are distant from the students have no idea if the results correspond to the student’s actual abilities? So I don’t think standardized tests are good, but I don’t have a more reasonable alternative, either.

    On the cultural issue affecting education, I’m with you 100%. But I’m not sure how to fix that problem. You can’t legislate that there have to be two parents, and you can’t mandate that parents take sufficient interest. I kind of feel that the only hope is to try to stress to our youth the importance of respect for sex, the sanctity of marriage, and the strength of a stable home in order to try to make life for the next generation better. And that becomes increasingly difficult as the nation is rapidly purging itself of respectable role models.

    As for minimum wage, I can agree that letting the states decide where the minimum is a good idea, especially in the respect for local economies. One of the problems I have is that the minimum wage can only go up. That might be all right if minimum wage is indexed against inflation (though I have arguments about that involving an increase in minimum wage only exacerbating inflation), but there are times when the economy slumps, and companies can only offer lower wages or lay people off. Another problem I have is that I have strong feelings against minimum wage being the base “living wage”. I’m not entirely certain why at the moment. Minimum wage is for the base, green, unskilled worker. Someone who has held a job for a year should not be making minimum wage. He should have seen some raises along the way, at the least. But that is theory, not practice. But here’s the main concern: when you increase the cost of unskilled labor, business tends to be less inclined to hire unskilled labor, and that hurts the unskilled laborers, makes it more difficult to develop skills and build a resume. So I guess the question is: is it really better to have no job at all than a job at $5.15/hr?

    I have no idea how much cost of living in in some places, but I think two people can live frugally in Laramie on about $1500/mo. That ends up being $750 per person take home. Using my sledgehammer approach to taxes (I assume the government simply takes 20% at this level), this amounts to needing to make a little less than $6.00/hr, assuming 40 hours a week, 4 weeks a month. At $5.15 an hour, this means the need to pick up a part-time job, but it is manageable. I know this doesn’t offer much chance of getting ahead, and any emergency can quickly destroy the budget.

    How do these numbers weigh against where you’re at?

    For the priority issues, I feel I might have stepped a little out of line with parts of what I said, and I apologize. And everything you said in your last comment about priorities is dead on, so I don’t have too much to add there.

  • I don’t think you stepped out of line on anything. Your apology is well accepted, but it isn’t necessary.

    To be brief, minimum wage laws are complicated and I don’t think we can come to an exhaustive, objective conclusion on what we should do. You pointed out correctly, I think, that a bare minimum wage can allow a person to live decently if they’re conservative and unyieldingly prudent with their spending habits. However, the slightest emergency can lead them to financial ruin. All I have to say is look at the skyrocketing cost of health care and the basic requirement of education today — with students needing supplies for projects, entire classes being mandated to purchase something, etc. The greater the number of people in this situation, the worse off we’ll be. Because we can’t have that many people fall through the cracks and expect our economy to survive. At the same time, we have to promote personal virtue and responsibility and not go into communism. So it’s a fine line.

    I agree entirely on standardized testing. I did change the standard of measuring progress: “The emphasis in education should be on writing well, thinking rationally and critcally, and being able to articulate clearly and synthesize ideas coherently.” I’m not opposed to testing if the entirety of your education is geared toward the goal of a sort of liberal arts — writing, analyzing, critical thinking skills, and being able to synthesize (coherently) information. If the education is good, then any sort of standardized test at the end of the day should be fairly simple. That’s currently not the case. Our education is geared toward passing a test and not toward being a fully developed human with knowledge of history, the arts, and the capacity to articulate and communicate effectively orally or in writing. Therefore, with the failure to do well on standardized tests, standards of education become increasingly lower, more class time is spent on taking practice tests, etc, than on actually developing these deeply needed skills. I think that’s why education is in such a crisis.

    I truly support any American who teaches their children at home because of personal disatisfcation with the current system. I’m glad this conversation is happening here because it deeply concerns me that Christians, especially Catholics, are not at the front of the American education reform movement. Most of whom I know (or rather, I have discussed it with) are just are very cynical and apathetic toward it. Behavior, values, etc. are learned. And if we cynically criticize culture and education, but aren’t the agents of change, our Christian values will receive — at most — lipservice. That’s what has happened in this country. Every sort of moral relativism, every affirmation of birth control, religious relativism, etc. will be conditioned into the next generation–in both education and culture. This is what I think happened in the late 20th century. The education system was taken away and Christians have not been on the forefront in reform and influence. We’ve created private schools, began to home school, but the mainstream public education that influences the majority, we’ve left to its own designs. And we’re paying for it now.

Both Candidates Are Wrong on Taxes

Wednesday, October 22, AD 2008

With each presidential debate it struck me more that both presidential candidates are wrong about taxes: wrong both in that neither man’s proposals are realistically enactable, in that they are not the correct responses to our current circumstances, and that they suggest some basic problems with their political philosophies.

McCain wants to provide a tax cut to all tax payers — though since the vast majority of real tax dollars paid by those in the top 10% of the income spectrum, the greatest savings will be experienced by “the rich”. McCain also wants to cut the corporate tax rate to bring it in line with other developed nations. And he promises to cut spending so much that he’ll nonetheless balance the budget.

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6 Responses to Both Candidates Are Wrong on Taxes

  • You see, as of now it is already the case that roughly 50% of US citizens pay no taxes.

    No income taxes. Those who don’t make enough to pay income taxes still pay other sorts of taxes (e.g. payroll taxes).

  • Even if you would have already got back every dollar of income tax withholding that had been taken from your paycheck during the year, Obama’s plan would provide you with additional money back. The check for your “refund” at the end of the year would be hundreds or thousands of dollars more than the total amount that had been withheld.

    It’s already that way. I receive a refund of thousands more than I put in, in large part to Bush’s “tax cuts for the rich”. It’s both a good thing and a bad thing. It’s good in the sense that it helps keep lower income families in the game, so to speak, rather than in the desperate cycle of the public dole. Bush’s cuts gave more relief to larger families like mine – though I’d rather see more proportionality in that regards. I don’t necessarily view it that 50% of the people don’t pay taxes. I know you were referring to federal income taxes, but the reality is that everyone pays taxes. It may not be a right or wise way of doing it but the current scheme merely serves to offset some of the tax burden that low income already bear (gas taxes, utility taxes, property taxes [very punitive in some communities], sales tax, state income tax [even some cities have income tax – Detroit taxes your income if you live in the city and all who work in the city, meaning a double hit if you dare live and work there], and let’s not forget insane tobacco taxes, which like the lottery are taxes directed at the poor who have little of anything but to look for some simple pleasure to cope or a gamble for hope.

    It would seem to me that if we’re going to have a progressive income tax, the standard deductions should be far higher, giving everyone, rich and poor alike a certain threshold of untaxed income.

    Means testing Social Security has benefits and could be just, but I don’t trust the same people who have made it insolvent to do something wise and just. First step I’d like to see with Social Security/Med would be to remove the cap on the base contributions and perhaps create a threshold before employee contributions actually kick in (the numbers would have to be crunched). I’m not a class warfare kind of guy, and don’t like to see anybody soaked, but to keep contributing 7.65% of your wage after $100 K a year doesn’t seem over the top to me and if as a society we’re going to consider SS a good thing, we should do it wisely.

    On the other hand, capital gains taxes shouldn’t be punitive (certainly shouldn’t be taxed higher than your income tax bracket and should have inflation factored in – a long term investment may appear to have a huge gain, but could be an actual wash due to inflation). The idea of an inheritance tax strikes me as outright criminal.

    Still, the problem is that we let the government get too big and screw too many things up. Policies should be made that direct the order of things to desirable outcomes (less burden and assistance of the poor and low income, more of the burden for those who can bear it), rather than merely soaking one person to hand it over to another while skimming off the top to administer it and perpetuate the cycle.

  • Good point on other taxes — I’d been trying to explicitly say “income taxes” since that’s what’s been in play, but I missed a few instances — and as you say: everyone pays payroll, gas, sales, etc. taxes.

    I would have no problem with taking the cap off payroll taxes, and perhaps putting in a floor where the first 2k/mo or something aren’t taxed at all. I know there’s the theory out there that social security and medicare are social services that everyone pays for rather than a welfare/safety net function (and thus the idea of everyone paying alike) but it seems it’s well past time we admit that was pretty much always a fiction.

    Given that social security was all “invested” in the government loaning itself money to spend on other things, we ought to go ahead and develop a slightly more progressive way of funding it just like other government programs, and make it clear that those who are able are expected to fund their own retirements.

    I take your point, Rick, that there are already refundable tax credits via the child tax credit. (I had two years where I got more money back than I put in, and that was with only one and two kids.) However, it strikes me that Obama’s proposal takes things in a significantly worse direction on that, given that he wants to simply issue a credit of $500 per adult, plus other credits for child care and college and such. I’d rather see a move dispense with the tax credits and exemptions for children and instead do income tax on the basis of per capita household income (divide the total household income by the number of members). That would provide a significantly greater benefit for parents of dependant children, and more accurately reflect the real costs people are dealing with.

  • By the way, my understanding is that Obama isn’t proposing to give a $500 tax credit to every adult so much as he’s proposing to keep that credit from going away when the Bush tax cuts expire. The tax credit, in other words, is already in existence, and Obama’s plan counts this as a “cut” only by treating the expiration of the Bush tax cuts as a baseline, rather than a tax increase.

  • Hmmm. I thought the only refundable tax credit I’d seen on my taxes the last few years was the per child tax credit — but I suppose I may be wrong on that.

    Clearly, it would be in the partisan interests of both parties to deny it was a Bush carry over if that’s correct.

  • I think Obama has a lot of other refundable tax credits for things like energy efficiency and college education (from $2000 to $4000).

    I sympathise with your arguments about how everyone should pay taxes, but don’t you think income inequality makes that not very feasible? The median household income doesn’t provide all that much room for taxes if your paying rent/mortgage payments, kids’ college or your own student loans, payroll tax for two income earners, and trying to save a little money.