Reason Magazine
- reason.com
- reason.tv
- reason.org
- Donate
- Site Search:
Reason on Facebook
Reason on Twitter
Reason on YouTube
Reason RSSGet Reason E-mail Updates!
Manage your Reason e-mail list subscriptionsadvertisements
Gonna Kill Kill Kill Kill the Poor Tonight
I'm puzzled by part of John McCain's new stump speech, which is still heavy on JoethePlumber. This part:
Senator Obama says that he wanted to spread your wealth around. When politicians talk about taking your money and spreading it around, you'd better hold onto your wallet.
Fine so far.
Senator Obama claims that wants to give a tax break to the middle class, but not only did he vote for higher taxes on the middle class in the Senate, his plan gives away your tax dollars to those who don't pay taxes. That's not a tax cut, that's welfare.
But John McCain wants to do this, too! I don't think McCain has proposed eliminating the Child Tax Credit or the Earned Income Tax Credit. No, I don't see any promise of that on his economic page. I do remember that McCain wanted to double the Child Tax Credit, and I do see this from McCain's speech.
I will provide every single American family with a $5000 refundable tax credit to help them purchase insurance. Workers who already have health care insurance from their employers will keep it and have more money to cover costs.
Th-th-th-that's welfare! Why, some of those people don't even pay income taxes! John McCain wants to spread the wealth around! Alternatively he believes in using tax credits to assist Americans with low incomes, like every serious Republican (or reader of Milton Friedman) wants to do. Look, either he can come out for a Rothbardian dismantling of the functions of the state or he can explain how his use of tax credits is different than Obama's.
Related: JoethePlumber hasn't been a bad issue for McCain, as it allows him to make a positive case for his agenda instead of a smirky anti-Obama case. But it's too quickly become another example of the insufferable whininess that's characterized this stretch of the McCain campaign. People were mean to Joe because he asked a question, just like they were mean to Palin, just like Obama played the race card and has to apologize or he's going to bed with no supper.
It's like they're being advised by Chris Crocker.
|10.20.08 @ 11:50AM|#
I find it quite comical when either one of the major parties
calls out the opposing major party for too much
spending/pandering/negative-campaigning/doing-pretty-much-anything-bad.
It reminds me a lot of my 6- and 4-year-old screaming at each other
about who bothers Mom and Dad the least.
jackscrow|10.20.08 @ 11:52AM|#
Sounds like France.
Bribing the po' peeps so they won't riot or sumpthin'.
Class warfare through redistribution schemes simply result in costs
being passed on down the line, with the rich continuing to get
richer, while the poor get poorer faster, and the middle class
totally vanishes.
But you knew that.
McCain loses because he's NOT conservative.
You knew that too.
|10.20.08 @ 11:53AM|#
Payroll taxes aren't taxes, for the same reason that military spending isn't real spending.
|10.20.08 @ 11:54AM|#
We've finally found the answer to the elusive question: when do
conservative oppose tax cuts?
When they're done in a progressive manner. Then, tax cuts are
welfare.
|10.20.08 @ 11:56AM|#
I wish I could take more pleasure in watching the McCain campaign go down in flames. It certainly has all the hallmarks of hysterical collapse. But I can't help being scared shitless at the prospect of Obama and the 'we'll do anything you want us to' congress.
|10.20.08 @ 12:02PM|#
David, I wish to say fuck thank you very much for
reminding me of Chris Crocker's existence. I had almost forgotten
him. :-)
|10.20.08 @ 12:04PM|#
OK, people were mean to Palin, and were total dicks to Joe the unlicensed plumber. Michael Young was a dick about Colin Powell, and so on and so forth. When you make your politics about people rather than policy, you have to expect that.
Twisted Nerve|10.20.08 @ 12:08PM|#
I assume by Payroll Taxes you mean that portion of your payroll taxer referred to as FICA ( Social Security and Medicare) right? FICA - Federal Insurance Contribtuons Act
|10.20.08 @ 12:12PM|#
Everyone hates the media. The media sucks and they are a bunch of assholes. Of course they were going to go after Joe when he had the terminity to ask the chosen one a bad question. But that is not the point. The point is that Obama had a rare bit of honesty and finally showed his true colors. The McCain campaign blew it by getting off that message and going after the media. Yeah, the media has no credibility and is facing bankruptcy. No kidding. There is not point in pointing that out. They let their opponents' appalling behavior distract them.
|10.20.08 @ 12:12PM|#
I don't believe you.
I don't think anyone who recognizes the term FICA is the slightest
bit confused about the meaning of the term "payroll taxes."
If you've got a point, you just go ahead and shout it on out.
|10.20.08 @ 12:13PM|#
David, I wish to say fuck thank you very much
for reminding me of Chris Crocker's existence. I had almost
forgotten him. :-)
I don't know about you, but I'm voting for the Jello Biafra/Chris
Crocker ticket on Nov. 4th.
|10.20.08 @ 12:14PM|#
I can't help being scared shitless at the prospect of Obama
and the 'we'll do anything you want us to' congress.
Sorry, Warren, but how is that substantively different from BOOOOSH
and a 'we'll do anything you want us to' congress?
And- would somebody please let Queeg out of his bubble?
|10.20.08 @ 12:15PM|#
Of course they were going to go after Joe when he had the
terminity to ask the chosen one a bad question.
Uh, yeah, that's it. Joe Wurzelbacher was the first person to ask
Barack Obama a tough question in the 20 months he's been running a
national campaign. That's it, exactly.
It had nothing to to with a coordinated media campaign across the
conservative blogosphere, the McCain campaign, the RNC, Fox, and
the conservative print media. It had nothing to do with the two
dozen times John McCain mentioned him during the debate, or the two
dozen times he mentions him daily on the stump.
The only reason Mr. Wurtzelbacher got media attention is because he
was the first person in the entirety of the 2008 election campaign
to ask Barack Obama a question.
|10.20.08 @ 12:18PM|#
Joe, you are assuming, of course, that McCain is a conservative,
which is a bit of a stretch.
Just a general question, but I think Bush proposed an actual
"conservative" approach to health care last year - the Standard
Health Insurance Deduction. Did that ever get anywhere? Just
curious - haven't heard anything about it recently...
|10.20.08 @ 12:20PM|#
We could kill the poor and eat them, but they have such terrible eating habits, they'd probably taste horrible.
|10.20.08 @ 12:22PM|#
Nope, Don, I'm assuming nothing about John McCain's political
philosophy, and how it fits into this or that definition of
conservatism.
I'm merely observing that the conservative noise machine has been
set in motion on his behalf, and in coordination with his
campaign.
You're telling me that the Mighty Wurlitzer is being put into the
service of someone who is NOT A TRUE CONSERVATIVE? OK, if you say
so.
Twisted Nerve|10.20.08 @ 12:25PM|#
Joe, believe me now or believe me later, I prefer to enter a discussion with the terms clearly defined. Thefefore, I submit that both aspects of FICA are federally mandeted policy premiums. Intentionaly and conceptually sepaerate from Federal Income tax.
|10.20.08 @ 12:35PM|#
Nope, they're not insurance premiums. They're taxes.
Separate from the income tax, just as Massachusetts' sales tax is
separate from the state income tax, but they are both taxes.
The federal government collects FICA, just like it collects the
income tax. It then spends the money it collects on current program
expenses. Heck, they even put FICA taxes into the general fund.
Twisted Nerve|10.20.08 @ 12:40PM|#
Joe, so sice the gov takes money specifically collected for FICA and misappriates it to the general fund, it all ducky. If it all the same thing why isnt it just rolled int one single tax?
SIV|10.20.08 @ 12:43PM|#
One of those thing I agree with joe on here.
FICA taxes are taxes.They aren't "premiums" on some sort of
insurance program.Of course if tax credits exceed the amount of all
payroll/income taxes paid they are welfare.
The Mystery Of Weigel|10.20.08 @ 12:46PM|#
Why is Weigel criticizing McCain for only being LESS socialist
than Obama, rather than criticizing Obama for being more socialist
than McCain?
Then we get some bizarre criticism that McCain shouldn't be
defending Joe the Plumber's right to ask Obama tough questions. Why
do I get the feeling if he'd suffered this after asking McCain a
tough questions, Weigel would be all up in arms over this as An
Important Libertarian Issue?
|10.20.08 @ 12:49PM|#
"Why is Weigel criticizing McCain for only being LESS
socialist than Obama, rather than criticizing Obama for being more
socialist than McCain?"
I think it has something to do with what the parties have
traditionally stood for. But maybe it has something to do with
McCain's campaign accusing Obama of things that McCain may be
guilty of. Who knows, its all so festive.
|10.20.08 @ 12:52PM|#
Twisted Nerve,
The funds are misappropriated. The legislation creating Social
Security in the 1930s mandated the government put the funds
collected under FICA be placed in the general fund.
If it all the same thing why isnt it just rolled int one single
tax? It isn't the same thing. One is a flat tax (with a top
cutoff) on gross income, and the other is a progressive tax on
adjusted income.
Why? Probaby because the two taxes were created a different times,
and designed/sold to appeal to different political circumstances,
and there's never been a good enough to reason to open up the cans
of worms necessary to consolidate them.
Most of government is like that, btw. What you're seeing is not the
reflection of someone's idealized design, but one policy designed
for a specific time and place piled on top of another. It's called
muddling through. If there isn't some important reason to go back
and reorganize everything, the government doesn't bother, because
the government doesn't change anything unless there is some big
push driving them to do it.
Fluffy|10.20.08 @ 12:57PM|#
When they're done in a progressive manner. Then, tax cuts
are welfare.
joe, the earned income tax credit - which specifically allows for
payments to the poor that exceed the amount of income tax paid, and
do so without any reference to payroll taxes, can't really be
described as a tax cut. It's a welfare payment using the
administrative machinery of tax collection.
I prefer the EITC to traditional transfer payments involving the
mediation of welfare bureaucrats, but it's still a transfer
payment.
Fluffy|10.20.08 @ 1:00PM|#
They aren't "premiums" on some sort of insurance
program.
They'd be more progressive if they were treated that way,
joe.
If FICA payments were treated as premium payments towards
"retirement income security", it would then make sense to deny
payouts to persons whose retirements are already secure. For the
same reason the car insurance people don't send out checks to
people who haven't gotten in any accidents.
Our failure to treat FICA taxes as insurance premiums leads people
to conclude that they're somehow pension contributions.
|10.20.08 @ 1:02PM|#
I would imagine that the convenient fiction that SS funds go in
to a lock-box, like what the vast majority of people believe, is
also politically expedient as well. If most young people understood
that the government is giving you an IOU written by your
grandchildren, as opposed to "saving" money for you, the program
would be even less popular.
Let me opt out, you can even keep the money I already paid in. Let
me opt out or means test the thing and reduce accordingly.
|10.20.08 @ 1:04PM|#
Fluffy,
If the people talking about "redistribution" i/r/t Barack Obama's
conversation with Joe Wurtelbacher were talking about the EITC,
that would be one thing.
But they're not - they're applying that term to a "redistribution"
scheme that consists of cutting the income taxes of people who are
paying larger amounts through FICA than the size of the cuts they
would get under Obama's plan.
Gilbert Martin|10.20.08 @ 1:18PM|#
"Sorry, Warren, but how is that substantively different from
BOOOOSH and a 'we'll do anything you want us to' congress?"
Really?
I guess I missed the part where the congress "slavishly" passed the
immigration "reform" legislation that Bush wanted them to.
|10.20.08 @ 1:21PM|#
Bush's deal with the Delay/Frist Congress after 9/11 was that they would give him whatever he wanted on the international, blowing-stuff-up end, and he would give them whatever they want on the domestic end.
jasno|10.20.08 @ 1:27PM|#
Weigel,
Aren't there supposed to be 5 kills in the title? I can't think of
a line where there's only 4 kills in a row...
|10.20.08 @ 1:30PM|#
Alternatively he believes in using tax credits to assist Americans with low incomes, like every serious Republican (or reader of Milton Friedman) wants to do. Look, either he can come out for a Rothbardian dismantling of the functions of the state or he can explain how his use of tax credits is different than Obama's.
You're right that he should explain it. But there is a significant
difference between their two plans, which it doesn't seem that
anyone on this thread cares about either.
Sen. Obama is proposing several new tax credits which phase out by
income, as well as bringing back phase-outs of other tax credits,
like the personal exemption
and other itemized deductions for high-income taxpayers. The
net effect would be to
sharply increase effective marginal tax rates at certain
points-- not just at the high end, but also at
certain middle end points like $45,000 AGI, where several new
tax credits would phase-out. It's true that average tax
rates would not increase much, but there are problems with
increasing marginal rates.
While phase-outs for deductions are attractive, they can create
welfare traps just as welfare in general can. People can be put in
situations where getting a better job or even getting a raise can
cost them almost as much (or more, in some of the more absurd cases
throughout the world) in lost benefits and tax credits than they
gain in extra wage income.
In that way, Sen. McCain's complaint has some validity. Tax credits
with relatively low and sharp income phaseouts are like
welfare, in that they suffer from exactly the same problem that
welfare did and act economically similar.
Milton Friedman certainly appreciated this problem for refundable
tax credits. That's why his negative income tax proposals were
still designed to try to minimize the marginal tax rate.
Sen. McCain's health proposal does not have the defect of
increasing marginal rates, while it is fairer to low and middle
income taxpayers than the current system. (Excluding health care
from taxes provides a larger dollar benefit to those in a higher
tax bracket already.)
But they're not - they're applying that term to a "redistribution" scheme that consists of cutting the income taxes of people who are paying larger amounts through FICA than the size of the cuts they would get under Obama's plan.
No, joe, they're talking about refundable tax credits, which
operate as the EITC does (though yes, he's not talking about the
EITC) and can be paid out to people who owe no net tax.
|10.20.08 @ 1:36PM|#
John Thacker,
Once again, defending McCain requires you to dodge the fact that
PEOPLE PAY PAYROLL TAXES.
See, look what you did here: No, joe, they're talking about
refundable tax credits, which operate as the EITC does (though yes,
he's not talking about the EITC) and can be paid out to people who
owe no net tax.
Who cares if you owe no net tax on April 15? Such people are still
paying their payroll taxes.
|10.20.08 @ 2:04PM|#
It ought not surprise you that John Thacker pretends payroll
taxes aren't taxes on income. It's necessary in order to maintain
the fiction that poor people don't pay taxes - and that fiction is
necessary to maintain the worldview that Obama is about rebating
taxes to people who didn't pay any to begin with.
It ought to make Mr. Thacker sleep ill at night, but it ought not
surprise you.
Fluffy|10.20.08 @ 2:14PM|#
It's necessary in order to maintain the fiction that poor
people don't pay taxes - and that fiction is necessary to maintain
the worldview that Obama is about rebating taxes to people who
didn't pay any to begin with.
If I employ someone who qualifies for one of Obama's new tax
credits, owes no net tax, and is paid 1099 and therefore faces no
FICA taxes, would that person end up getting a direct transfer
payment greater than my total tax paid under Obama's plan, or
not?
[While asking that, let me differentiate my question from Thacker's
point above, which I have a problem with. It sounds like Thacker is
arguing that if Obama gives out a brand new tax credit to people
who make $45000 or less, that means that the guy who makes $45001
is getting a tax "increase", because of the marginal greater amount
he'll pay than the guy making $44999. And I don't agree with that.
If your taxes stay the same, it doesn't matter what the guy making
less than you is paying - it's inappropriate to call your
experience a "tax increase", as the McCain camp apparently insists
on doing.]
Fluffy|10.20.08 @ 2:14PM|#
Sorry, that should say, "greater than his total tax paid" in order to make any sense whatsoever.
Gilbert Martin|10.20.08 @ 2:25PM|#
Whether you are talking about payroll taxes, income taxes or both, unless the amount of tax "refund" each person gets is made directly proportional to the total dollar amount of taxes he or she orignally paid in relative to everyone else, it is still a redistribution scheme.
|10.20.08 @ 2:31PM|#
The sun beams down on a brand new day
No more welfare tax to pay
Unsightly slums gone up in flashing light
Jobless millions whisked away
At last we have more room to play
All systems go to kill the poor tonigh
|10.20.08 @ 3:07PM|#
The basic problem with all the arguments over taxes is that
there is no one attempts to articulate any principle that would
help us decide how high they should be. The arguments on both sides
just revolve around fairness, which is so vague it contributes
nothing.
Here are my thoughts on some principles that I think are
libertarian. There are some legitimate functions the government
should be paying for. Each function provides benefits to
individuals. Individuals should pay the cost of those functions in
proportion to their share of the benefits. Some functions benefit
everyone equally, and others benefit some individuals more than
others. To the extent some are benefited more, it fair to charge
them more. And of course, there are administrative costs to
figuring out the exact benefits and proportions, so schemes that
reduce those administrative costs can be justified to the extent of
those costs (i.e. gas tax instead of tolls for road construction
and upkeep if sufficiently less expensive to administer). To the
extent some absolutely necessary government services benefit people
who cannot pay (severely disable, poor, etc.), they should be
funded by a per capita head tax.
Neu Mejican|10.20.08 @ 3:48PM|#
Lamar | October 20, 2008, 12:49pm | #
"Why is Weigel criticizing McCain for only being LESS socialist
than Obama, rather than criticizing Obama for being more socialist
than McCain?"
Is it because Obama wants to pay for the revenue hit that his
pandering to the middle class will have by raising taxes on the
people that McCain wants to give a bigger tax cut to?
http://www.washingtonpost.com/wp-dyn/content/story/2008/06/09/ST2008060900950.html
The plans seem equally socialist, but McCain is pretending he is
not redistributing wealth. Ignoring payroll taxes in a discussion
about tax burden is idiotic. Payroll taxes are regressive, so a
progressive income tax helps to shift the burden back up the income
ladder a bit.
Neu Mejican|10.20.08 @ 3:52PM|#
Individuals should pay the cost of those functions in
proportion to their share of the benefits. Some functions benefit
everyone equally, and others benefit some individuals more than
others. To the extent some are benefited more, it fair to charge
them more.
So is income a good proxy to show that you have benefited more?
Gilbert Martin|10.20.08 @ 3:58PM|#
"Payroll taxes are regressive, so a progressive income tax helps
to shift the burden back up the income ladder a bit."
Payroll taxes (i.e FICA) is supposedly payment into a system that
entitles one to get something back in return at retirement. This is
not the case with federal income tax payments.
And the social security benefit formulas are already "progressive"
in that those on the low end of the income scale get a
proportionally larger benefit relative to their contributions than
do those on the upper end of the scale.
|10.20.08 @ 4:00PM|#
To the extent some are benefited more, it fair to charge
them more.
Still not an argument for a progressive tax.
$15,000 at 15% = $2,250
$250,000 at 15% = $37,500
It's income tax that should be capped, not incomes. Once I'm paying
more than I get back, it becomes outright theft.
|10.20.08 @ 4:02PM|#
"So is income a good proxy to show that you have benefited
more?"
I would argue no, but the point is, that some principles like this
would help frame the argument in a sensible way. Fairness gets us
no where.
|10.20.08 @ 4:02PM|#
So is income a good proxy to show that you have benefited
more?
I don't see why. For nearly all high earners, their income is
reflection of your value in the non-governmental market, not the
degree to which they reap government benefits.
In fact, in a society with a safety net, high earners don't see
many of the benefits that are the most expensive - the entitlements
and transfer payments.
Payroll taxes are regressive, so a progressive income tax helps
to shift the burden back up the income ladder a bit.
An all-in analysis of both "income" and "payroll" taxes, shows that
the burden is already skewed to the top end.
This is the best table I could come up with on
short notice.
|10.20.08 @ 4:07PM|#
And let's have a koan about the nonsense earlier...
If you pay me $300 for a TV, and I give you the TV, your $300, and
an additional $500, have you actually paid for the TV? Or just been
a pea in a shell game?
Getting back all of your payroll tax and an additional amount is
not paying taxes. It's involuntary participation in a Christmas
Club savings account that has a wildly profitable interest
rate.
Molly|10.20.08 @ 4:33PM|#
"Gonna Kill Kill Kill Kill the Poor Tonight"
Kill, Kill, Kill, Kill? Fuck You, Weigel.
Neu Mejican|10.20.08 @ 4:38PM|#
Payroll taxes (i.e FICA) is supposedly payment into a system
that entitles one to get something back in return at retirement.
This is not the case with federal income tax
payments.
Sure it is.
Minus the retirement part.
You get government services for your payment.
An all-in analysis of both "income" and "payroll" taxes, shows
that the burden is already skewed to the top end. This is the best
table I could come up with on short notice.
I guess that depends upon what you mean by burden. If you are
talking about percentage of taxes payed, you are certainly correct.
It is unclear to me whether this means that high income earners are
more burdened by their taxes than lower income earners. I would
speculate that anyone over $100,000 income after taxes is unlikely
to be substantially less happy because of their taxes.
In fact, in a society with a safety net, high earners don't see
many of the benefits that are the most expensive - the entitlements
and transfer payments.
This seems to imply that they only benefits that count are direct
benefits.
Molly|10.20.08 @ 4:40PM|#
"Why is Weigel criticizing McCain for only being LESS socialist
than Obama, rather than criticizing Obama for being more socialist
than McCain?"
Because he's in love.
Neu Mejican|10.20.08 @ 4:42PM|#
Relationship between income and happiness...
http://blog.penelopetrunk.com/2007/07/11/new-research-reveals-some-new-ways-to-buy-happiness-sort-of/
It turns out that money actually can buy happiness, but not a
lot of it. At some point, well under $100,000, the happiness value
of a dollar starts to plummet, according to Richard Easterlin,
economics professor at University of Southern California. This is
because social interactions impact happiness more than money
does.
But here's a new way to look at the money and happiness equation,
from a new study by Nattavudh Powdthavee of the University of
London: If you make sure to see a friend or relative in person
almost every day, that is like increasing your salary by $180,000 a
year.
Neu Mejican|10.20.08 @ 4:46PM|#
So...
Carbon tax?
Get rid of tax on labor (income tax/payroll tax) and replace it
with a tax on material throughput, starting with carbon and other
greenhouse gases.
Neu Mejican|10.20.08 @ 4:56PM|#
fyodor | October 20, 2008, 4:45pm | #
I wonder what the dollar equivalent of freedom is.
I believe the happiness value of money has to do with the amount of
freedom it buys you. More money buys you more options...but there
is a ceiling effect of sorts.
I think it will work on the other end as well.
You need a basic amount of freedom to be happy. The closer you are
to that threshold, the more valuable that last little bit of
freedom is. If you are near the ceiling, the change of levels won't
matter that much.
This is how the US lets something like the Patriot act pass. Unwise
to say the least.
Gilbert Martin|10.20.08 @ 4:59PM|#
"You get government services for your payment."
There is no correlation between government services received and
payment. Some people pay no income taxes at all and others pay
large amounts of income taxes. The one's who pay no taxes are not
receiving zero services.
No one's income level is a "service" provided to them by the
government.
Neu Mejican|10.20.08 @ 5:08PM|#
RC Dean,
An all-in analysis of both "income" and "payroll" taxes, shows
that the burden is already skewed to the top end. This is the best
table I could come up with on short notice.
Isn't this a better table?
http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?DocID=455&Topic2id=20&Topic3id=22
Neu Mejican|10.20.08 @ 5:09PM|#
No one's income level is a "service" provided to them by the
government.
Unless you are a politician/former politician turned lobbyist?
Right?
But seriously, who said it was.
I asked whether it was a proxy measure of benefits received as a
citizen of the society.
Neu Mejican|10.20.08 @ 5:11PM|#
No one's income level is a "service" provided to them by the
government.
Unless you work for AIG?
|10.20.08 @ 5:12PM|#
It sounds like Thacker is arguing that if Obama gives out a brand new tax credit to people who make $45000 or less, that means that the guy who makes $45001 is getting a tax "increase", because of the marginal greater amount he'll pay than the guy making $44999. And I don't agree with that. If your taxes stay the same, it doesn't matter what the guy making less than you is paying - it's inappropriate to call your experience a "tax increase", as the McCain camp apparently insists on doing.
I am not arguing that it's a tax increase. I never said that, and
I'm not sure how you conclude that. In fact, I noted above that
average income tax rates would decrease even as the marginal rates
increased at various points. I said that high marginal rates are
bad wherever they occur, and that phase outs of credits have the
same effect on behavior and are economically indistinguishable from
taxes. If you make $44k and a pay raise of $2000 costs you $1000 in
lost benefits in addition to the smaller increase in taxes, you
face an effective high marginal tax rate. That's not economically
efficient.
You're right that it's not a tax increase on people making more
(except for complicated arguments involving that everything has to
be paid for eventually, so if you're not getting some of the money,
you're probably going to be someone paying for it, but that kind of
logic leads you in all sorts of places and I'm not making
it.)
The main point of the EITC, in my opinion, is to try to reduce the
high effective marginal tax rates otherwise faced by welfare
recipients. If welfare pays you $30k, and you get absolutely
nothing if you get a drop, you face an enormous effective tax for
working. The EITC is designed to lower the effective marginal tax
rate by not having benefits drop as fast when one works, somewhat
similar to Milton Friedman's negative income tax proposals.
I don't see Sen. McCain above claiming that it's a tax increase. I
do see him claiming that it's like welfare, which has a decent
point, especially to the degree that the tax has a phase-out. His
tax credit for health care does share some of the same features,
but does avoid the serious problem of marginal tax rates.
Neu Mejican|10.20.08 @ 5:14PM|#
700billion in federal resources are being put into the financial
sector. Is this service provided to these high income earners
proportional to their tax burden?
;^)
Gilbert Martin|10.20.08 @ 5:18PM|#
"But seriously, who said it was.
I asked whether it was a proxy measure of benefits received as a
citizen of the society."
No - it's not.
As I said, those who pay no income taxes are not receiving zero
services.
|10.20.08 @ 5:21PM|#
Get rid of tax on labor (income tax/payroll tax) and replace it with a tax on material throughput, starting with carbon and other greenhouse gases.
If you consider
tax incidence, Neu Mejican, there are pretty significant
reasons to decrease corporate taxes as well, since their burden
falls mostly on labor as well. That's one reason why Sen. Obama's
plan to tax people whose companies don't provide them with
healthcare seems like adding insult to injury to me.
Gilbert Martin|10.20.08 @ 5:24PM|#
"700billion in federal resources are being put into the
financial sector. Is this service provided to these high income
earners proportional to their tax burden?"
What high earners specifically are you talking about?
If you mean some executives at investment banks or commercial banks
who would otherwise be out of job, then you have a point.
If you're including "high earners" who work at Exxon Mobile or
Google, then you don't.
|10.20.08 @ 5:29PM|#
Isn't this a better table?
http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?DocID=455&Topic2id=20&Topic3id=22
A better table? It's one interesting piece of data about the
distribution of income, but it doesn't tell much about how much in
taxes people actually pay. It only lists statutory top marginal
rate, but doesn't list, e.g., the value of exemptions and credits.
NB: As a percentage of income, many in the "top 5% but not top 1%"
of income have the greats exemptions because certain exemptions top
out in value. That's why the AMT hits households in the $150-$500k
range even more than households above $500k,
see Table 3 of this PDF, also from the Tax Policy Center.
|10.20.08 @ 5:34PM|#
If the complaint is that poor workers already pay payroll tax, and that it's a burden, good, cut payroll tax. I would applaud it as an effort to decrease their effective marginal tax rate. However, while I have no problem with Social Security becoming a welfare program that provides people with a basic sustainable income (but not necessarily providing the upper middle class with an upper middle class income), many Democrats seem to disagree. If you refuse to cut payroll tax for them for any one of a number of reasons, including that it's supposed to pay for Social Security, then please don't use payroll tax as an excuse, especially not to provide a phased-out tax credit that increases marginal tax rates.
|10.20.08 @ 5:56PM|#
An all-in analysis of both "income" and "payroll" taxes,
shows that the burden is already skewed to the top end. This is the
best table I could come up with on short notice.
I guess that depends upon what you mean by burden. If you are
talking about percentage of taxes payed, you are certainly
correct.
Click through to the table. It shows that the percentage of income
paid in income/payroll taxes combined is "progressive" right now -
that the more you earn, the greater percentage will be claimed by
the feds.
|10.20.08 @ 6:04PM|#
Isn't this a better table?
It goes higher into the income spectrum, sure, but at those levels
the data gets really dirty, because so much of the income at really
high levels is not wage income but comes from other sources (cap
gains, partnerships, dividends, etc.).
That kind of income is exactly the income that will evade taxes at
higher marginal rates. Its very, very difficult to capture in a tax
system.
Neu Mejican|10.20.08 @ 6:50PM|#
If you mean some executives at investment banks or
commercial banks who would otherwise be out of job, then you have a
point.
That was the point of the sarcastic statement.
that the more you earn, the greater percentage will be claimed
by the feds.
My point is that this does not map directly onto the burden felt.
10% of 10,000 dollars may hurt worse than 10% of 1,000,000
dollars.
As I said, those who pay no income taxes are not receiving zero
services.
Huh?
I asked whether income could be seen as a proxy measure of the
benefits you are getting from being a citizen of a particular
society.
That would be a possible justification for a progressive tax. Those
at the top benefit more, so they should pay more...or something
along that line.
|10.20.08 @ 8:09PM|#
I think you were looking for This chart. Contrary to what I expected, the three lower income quintiles have seen their tax burden as a share of federal revenue go down, not up.
MJ|10.20.08 @ 10:12PM|#
"My point is that this does not map directly onto the burden
felt."
Unfortunately, deciding how the burden "feels" is an entirely
subjective exercise, and a poor basis on deciding policy. The only
objective criteria to apply is how much someone actually pays as
percentage of income, and the tax code is already more than
sufficiently progressive.
Gilbert Martin|10.21.08 @ 8:05AM|#
"Huh?
I asked whether income could be seen as a proxy measure of the
benefits you are getting from being a citizen of a particular
society."
And I answered no. As I said, those who are paying no taxes are NOT
receiving zero benefits. That is one example of how income is an
invalid proxu.
Gilbert Martin|10.21.08 @ 8:07AM|#
"That would be a possible justification for a progressive tax.
Those at the top benefit more, so they should pay more...or
something along that line."
There is no proof that "society" is the reason why they are at the
top to begin with.
Neu Mejican|10.21.08 @ 12:31PM|#
Gilbert Martin,
Thanks for clearing up your point.
As for "proof" of the causes of success...well, there is certainly
good evidence that without a stable society, most successful
individuals would not be as successful as they are.
No man is an island and all...
Site comments/questions:
Media Inquiries and Reprint Permissions:
(310) 367-6109
Editorial & Production Offices:
3415 S. Sepulveda Blvd.
Suite 400
Los Angeles, CA 90034
(310) 391-2245