Comparing Tax cuts. Bush vs Gore

Great Debates
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pthalis said

Why, oh why, should I be forced to give money to people who made bad choices? Is it truly my duty to make up for Joe’s decision to drop out of highschool and have 5 kids?

Here folks we have it. THat government should, nay must, give money to the poor is a foregone conclusion. To argue otherwise is nothing but mean spirited self interest. In order to be a good citizen, I must give money to the poor. And there is anecdotal evidence that proves it!

And no, I don’t really care about the self inflicted misery of others. You makes your decisions, you lives with the consequences.

pld when I was talking about defining the “poor” I meant giving a firm number on what is poor. Teh danger in these argument is that rich can mean earning over $60k per year and “poor” can mean making under $30k for a household. without some boundaries, we may all be refering to a different set of people.

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For those who are finding this whole debate a little depressing after a while and want an antidote to the “I have mine and don’t want to share any of it with anyone else” philosophy, check out http://www.responsiblewealth.org

Or, if you want to be amused, check out http://www.billionairesforbushorgore.com/ “because inequality is not growing fast enough!” It’s particularly enlightening if you go to the link to “Candidate Price/Performance Analysis” and then the link “Return on investment”.

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Mr. Z. said: Why, oh why, should I be forced to give money to people who made bad choices?

Okay, gonna say this one more time, so excuse me for yelling just this once:

**BECAUSE

IT’S

CHEAPER!!!**

As Collounsbury and I have both been pointing out, there are significant positive externalities to helping the poor, irrespective of how they got that way or whether they “deserve” help (as long as they are helped in constructive ways that give them incentives to move out of poverty). As an article in this week’s American Prospect noted, employment and education compete with other, less productive activities like crime for the time and energy of poor people: crime rates have been shown to be strongly linked to poverty rates. The more thoroughly we abandon people who make bad choices and wreck their lives because of them, the more problems those people are going to have, and the more problems they’re going to give us.

On the other hand, if you help sorry old Joe to finish his education and get a decent job, he’s a lot less likely to become a drug user and/or criminal, two very expensive types of people to have in a society. And if you help Joe’s five kids (who are in no way responsible for the bad choices Joe made, after all) to get a good education, they are much more likely to turn into responsible and productive members of the workforce.

It may just drive you crazy to give money to Joe because he doesn’t deserve it, but I guess I’m way more pragmatic than you: I figure that if it’s cheaper to spend money on Joe and his ilk than to pay for the extra police, jails, hospitals, and so forth that will be required to deal with Joe and his ilk if we just let them drift—hell, I’m going with the cheaper deal.

So tell me, Mr. Z., is it that you just don’t believe that helping the poor, even the “undeserving” poor, is significantly cheaper for society as a whole in the long run than simply ignoring their problems? If that’s the case, let me know and I will collect some references to show you the evidence for that claim. Or is it that you are just so furious at the thought of being forced to give your money to people who made bad choices that you would rather spend more money for police and prisons and so forth, just to avoid helping the undeserving? If so…wow, they say liberals are too reckless about spending money in support of their ideology, but I think in this case the conservatives have them beat.

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Kimstu, you and I agree on very little. But in this case I think that you are preaching to the choir. I agree with you 100%. I pay 37% in taxes, and I begrudge that somewhat. However, I strongly believe that we should help the poor for all of the reasons you cite. What we disagree on is how to help the poor. I think that the money used for the EITC would be better spent on day care and education (vocational eductaion, that is.) THe EITC is a reward for not making much money. All progressive taxation is a dis-incentive for doing well financially. I would prefer a more equitable tax rate.

I couldn’t agree more. Well put.

nope. I simply believe in providing disincentives for costly behavior. That is nothing but pragmatism free of moralism and bleeding heart kindness. Provide punishment for costly behavior and incentive for responsible behavior. It is a tried and true method enforced by nature.

you wont get me there. we disagree on how to accomplish this. I believe in helping those who fall below a certain base line. I do not agree with “progressive taxation” and the concept of adding more and more benefits to those that choose not to work. If you want evidence of how taxation can cause people to choose not to work, I will gladly provide cites. But, as I have stated, I think we are both in basic agreement on the goals, while differing on the strategy.

I truly love to argue with you and it saddens me that we actually agree on something. One of us has to get more cantakerous.

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All right, buddy, who are you and what have you done with Mr. Zambezi? :wink:

Seriously, then I think we actually are in agreement about the most important issues: it’s better for everybody if poverty is reduced; it’s worth spending money to provide effective incentives and disincentives for people to get out of poverty, no matter how they got into it; success rates and cost-effectiveness are more important than ideology in deciding what methods to use. No argument there.

So as not to deprive us of any argument at all, I’ll make a small quibble about one of your points: “All progressive taxation is a dis-incentive for doing well financially.” True almost by definition; however, I don’t think it’s all that much of a disincentive. Yes, badly-designed welfare systems sometimes make work less rewarding than welfare, and that’s one of the major things welfare reform should address; and yes, I’ve known cases where people have avoided overtime or other potentially profitable work because the extra pay would tip them into a higher tax bracket and they’d actually lose net income.

But I don’t think that progressive taxation is really discouraging people from doing well financially. Most people are still trying to make more money, because they realize that even though the government will get more of the extra, it won’t take all of it. If we had an income cap above which the tax rate was 100%, that could be a major disincentive, but we don’t. Consider that the '50’s and '60’s saw large increases in average income and standard of living, even though the top tax rate then was over 70%. I think we could restore our tax system to being significantly more progressive without actually discouraging upper-bracket earners from trying to do well financially. If you have cites for evidence contradicting that position, bring 'em on! :slight_smile:

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Mr.zambezi 3.0 has been upgraded to version 3.6. the old Z is in a shoebox in my desk :wink:

I was going to cite Sweden’s stats. But that would not isolate income tax. It would include the effects of many social programs. In essence, Sweden has about 1/4 of the population working for private industry.

I will say that as it stands, the single monm working for me makes about half what I do. I take home about 7,800 more than she does or 26% of her salary. If I were to have 2 kids and drop my slary 30%, I could take home about the same amount of money. I think that we are perilously close to creating a disincentive for hard work. I simply want to stem the tide of socialism in the US, which is why I like Bush’s tax plan. Gore simply wants to spend and tax more.

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As a small quibble on your small quibble, I actually don’t think this scenario is possible. When you move into a higher tax bracket, not all your income is taxed at that higher rate…just the amount that falls into the new bracket. So, net income is a continuous and monotonically increasing function of gross income; it is just the slope of the curve which has discontinuities at the tax bracket borders.

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really? I was sure that I got taxed the same on all of my income. Any supporrt for this?

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Well, Mr. Z., looks like we’re not gonna run out of things to argue about yet awhile. :slight_smile:

I will say that as it stands, the single monm working for me makes about half what I do. I take home about 7,800 more than she does or 26% of her salary. If I were to have 2 kids and drop my slary 30%, I could take home about the same amount of money. I think that we are perilously close to creating a disincentive for hard work.

But in the first place, if you had 2 kids, would you drop your salary 30%? Wouldn’t you want more money instead of “about the same amount” and thus keep striving to make your salary bigger? How realistic is it to say that this might be a disincentive, if it’s not something you would actually do?

In the second place, it seems to me that you’re assuming that “working harder” = “making more money.” Does your single-mom employee really work only half as hard as you do? (I bet she spends less time on the SDMB, for one thing. ;)) Does Bill Gates really work ten thousand times as hard as you do? Yes, we want to give people incentives to be productive and self-supporting and hardworking; but I don’t think that that means that those incentives always have to override every other consideration. The fact is, given reasonable incentives to work and disincentives for not working, most people will work, even under a progressive tax system. (I have tried to figure out what relevance this has to your comment about 1/4 of Sweden’s workforce working for private industry, and I have to confess that I don’t understand what you’re getting at.)

I simply want to stem the tide of socialism in the US,

What tide of socialism? Where is the evidence that the US is going socialist, or that market capitalism is declining in importance and influence? Hard data, please!

*which is why I like Bush’s tax plan. Gore simply wants to spend and tax more. *

In the first place, note the comments in many of the above posts to the effect that Bush’s proposed tax plan has about zero chance of ever being implemented even if he is elected. (In particular, note my post from yesterday about the Times article on Congress voting to commit budget surplus mostly to paying down the debt.) Where’s a realistic budget proposal that supports the idea that Bush’s tax cuts are anything more than a ploy to catch voters with? Where’s he planning to get the money from to cover the lost tax revenue? Remember when Reagan slashed upper-bracket tax rates in the '80’s and ran huge budget deficits for years? That’s partly why we’re spending so much on interest payments on the national debt (16% of all federal spending, IIRC) right now. If you like Bush’s plan so much, can you tell me whether and how you think he would actually carry it out in a fiscally responsible way?

In the second place, where’s your cite for the assertion that Gore “wants to spend and tax more”? He may be proposing to spend and tax more than Bush is now proposing to do, but as I said, Bush’s plan is simply blowing smoke. Real-life policies are always more expensive than Chocolatebunnyland fantasies.

Remember when Michael Dukakis was running against the elder Bush in 1988? He said, “If I’m elected, I will raise your taxes. If Bush is elected, so will he. He won’t admit it. I just did.” Dukakis turned out to be absolutely right, too.

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Maybe not. I may want less responsibility, shorter hours, less travel, etc.

“hard work”, in my book, does nto equate with physical labor. Sure, I have free time and don’t scrub floors. But I also have a command if insurance and a lot of authority. I have to fire people. Is that easy? I have to understand the nueances of mergers and acquisitions insurance policies and the net present value of cash stored under a sellfi insured retention fund. If I screw up, I get axed. I don’t really think that we can make linerar equations on the hardness of work vs. compensation.

social security, wlfare, medicaid, medicare. Gore is proposing "universal healthcare starting with children. Universal day care, a 39% income tax rate on the top earners, food stamps… And Gore is proposing many new state funded benefits. Socialism is a slippery term. But in my books, that is what Gore is leaning towards.

I will cite the convention speech. 28 promises, all costly.

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Boy, no wonder people get so exercised about the tax code! I’m not going to claim it’s totally rational, but it’s more rational than you think it is! You can verify how your income gets taxed by looking in your IRS 1040 booklet. Although those of us making less than some certain amount ($100,000?) are supposed to use the tax table in the back, they also have the formula for how to compute your tax (1) for the benefit of those who make an amount above the tax table and must use it to compute their tax, and (2) for the benefit of the rest of us so that we can see how the tax is computed. You can easily verify that the formula corresponds to what I said.

This fact has some interesting implications, as noted by the folks at Citizens for Tax Justice, in that even a cut in only the lowest tax bracket lowers taxes for EVERYONE, not just the poor. In fact, in dollar terms, if a cut is made in the lowest bracket, everyone in higher brackets gets exactly the same amount off their taxes while those in the lowest bracket get less…with the amount increasing in proportion to how “high up” their income falls in that lowest bracket.

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Mr. Z. said: *I don’t really think that we can make linerar equations on the hardness of work vs. compensation. *

Okay, neither do I. That’s why I’ve been concerned at your referring to people who don’t make enough money to live on as “not working hard enough.” Many people are working plenty hard—as hard as you, even—and not getting paid a living wage. That doesn’t mean I’m arguing that they necessarily ought to get paid as much as you: the salaries of different occupations are determined more by market issues than by merit issues, and that’s just the way it is. However, unless we’re willing to say that it’s acceptable for people who are responsible and hardworking to make less than a living wage—which I’m not, personally—then we either have to mandate that their employers pay them a living wage or else provide them with some assistance.

*“What tide of socialism? Where is the evidence that the US is going socialist, or that market capitalism is declining in importance and influence? Hard data, please!”

social security, wlfare, medicaid, medicare. Gore is proposing "universal healthcare starting with children. Universal day care, a 39% income tax rate on the top earners, food stamps… And Gore is proposing many new state funded benefits. Socialism is a slippery term. But in my books, that is what Gore is leaning towards. *

Oh, I see, you are using “socialism” in a kind of fuzzy way to mean what I think most political scientists would call “welfare capitalism” or “regulated capitalism.” To me, socialism is a non-capitalist social and economic structure of the kind that oldscratch is talking about in the “Is capitalism doomed?” thread. Even if Gore implemented every program he ever wanted for particular socialized services, we still wouldn’t have socialism or anything like it in this country. In fact, with the increased size, number, and influence of multinationals and other corporations, it could well be argued that capitalist forces are more powerful in the US now than they’ve been for about a hundred years. That’s not a “tide of socialism” in my book.

*“In the second place, where’s your cite for the assertion that Gore `wants to spend and tax more’?”

I will cite the convention speech. 28 promises, all costly. *

Fair enough then, at least as far as spending is concerned. But remember that back in our brief moment of harmony we did agree that some money needs to be spent to encourage and assist people to lead responsible, productive lives, and that those efforts can actually be cheaper than a more laissez-faire approach to governance. Just because Gore wants to spend more than Bush now (even if you believed Bush’s promises which I don’t, not that I think all of Gore’s are necessarily sincere either) doesn’t mean that what he’s proposing would be more expensive for our society in the long run than what Bush would do. After all, Reagan came to office promising to cut taxes and get government off our backs, and that turned out to be pretty damn expensive for the ordinary taxpayer in many ways (Star Wars, S&L bailout, War on Drugs, new prisons, deficits,…).

And a thank-you to jshore for clearing up the “progressive taxation” issue. (But watch out, dude, you started posting to this board from work and that’s one of the first symptoms of addiction. :))

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From the 1999 US Master Tax Guide, pub by CCH.
Schedule X, Single individuals: 1999
$0 > $25,750 $0 + 15% of the amount over 0
$25,750 > 62,450 $3862.50 + 28% of "’ “” "’ $25,750
$62,450 > 130,250 14138. + 31% of " 62450
130,250 > 283,150 35,156 + 36% 130,250
283,150 > … 90,200 + 39.6% 283,150

So, if your taxable income was $283,151, exactly ONE dollar would be taxed at the “top rate” of 39.6%, the 1st 25K or so is taxed at just 15%, etc.

Thus, getting a raise/OT will not “push all your income into a higher bracket” so that you would have a net loss.

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BTW, both Great Britain and Canada have socialized health care systems. I would hardly term those countries, “socialism.”

So Gore wants to help give little kids health care? How dare he! :rolleyes:

I mean, give me a break! If we’d had socialized health care years ago, I wouldn’t be sitting here with a fucking tooth ache.

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Kimstu said:

Kimstu, first of all I would use the word unfortunate in place of acceptable. The problem I have with the liberal position is the idea of univerisality (everyone must make a good wage, have health care, etc,). This notion is a grand ideal, makes for good talking points, but in reality remains only an ideal. Regardless of the programs, the special services, and all the money thrown at the problem, there will be those who, (sometimes admittedly through no fault of their own), slip through the crack. The added costs of trying to get those last percentages to disappear would be astronomical. Where is the stopping point? Frankly, I don’t know, but when I see the huge sums we are throwing around in some these social engineering programs that are heaping dubious results, I cringe inwardly.

Secondly, what do we mean by responsible? To personally illustrate, at one point in my career, my company was in the process of folding with layoffs on a weekly basis. Through subsequent senority bumps, I found myself as the janitor, cleaning out shitters, moping the breakroom, and emptying trash. I was responsible for a family of four at the time so I also took on an extra job on the weekends. All this took place while I was attending school full time in an engineering cirriculum. I was ambitious to do better and therein lies the crutch of the problem as I see it. There were all kinds of folks in the same position as I was. But a good many of them thought it was great to poke fun at me studying through lunch while they played cards and waited for the plant to close so they could go on to their next deadend (lowpaying) job. I might add that the company had a tuition assistance program where any of them could also have taken advantage. Out of 45 employees, I was the only one.

I believe in making education possible through assistance. I believe in providing day care to allow someone to work and/or get their education. That is money well spent. BUT, I have little compassion for the dregs who whine “woe is me” and look around every corner for the next handout. A hand up… absolutely! A handout…never (if I have anything to say about it).

Lastly, I’d like for you to sereously consider your comment about “mandating” that businesses pay beyond the minimum wage. There are more people employed by small business in this country than the large corporations (anyone have a cite handy?). Many are of the “mom & pop” variety like that of my parents (little roadside craft shop with 4 people counting my folks). They would be forced to close down or at the very least lay off 1 or both if such a change was mandated, and the two ladies they have working LOVE working there. The unemployment rate at this point in time is realively low and your idea IMHO from what I have understood would tend to raise that substantially thus widing the “crack”. I can hear it now…we need more funds to help the poor …

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Anyone want to take a guess as to who faces the highest marginal income tax rates?

Nope.
It’s those who are in the phase-out range of the EIC. Fair?

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Umm, I just quoted tha US Master Tax Guide, above, and those folks are NOT in the 39.6% rate with folks who earn some 300K*. I have NO idea what you are talking about, but you are very wrong. Perhaps you mean those whose tax rates have the biggest rate of increase?

  • around here, some std deductions start phasing out, so some also talk about a higher rate than that, but 39.6 is the highest ACTUAL rate.
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Phil_15 said: *I believe in making education possible through assistance. I believe in providing day care to allow someone to work and/or get their education. That is money well spent. BUT, I have little compassion for the dregs who whine “woe is me” and look around every corner for the next handout. A hand up… absolutely! A handout…never (if I have anything to say about it). *

Well Phil, after all that, it looks as though we’re not really disagreeing about much, except perhaps in our attitudes. I’ve already said that I think we need to provide incentives and assistance for working and bettering oneself (daycare and tuition assistance are great ideas; and as I’ve said above, the EITC seems to be quite effective in that way too), as well as disincentives to discourage those you call the “dregs” from refusing to do so. (Our only disagreement might be that I would be in favor of spending the small amount of money it would take to provide bare subsistence to even the incorrigible “dregs”, who are quite a small fraction of the poor population, whereas you might say that we should take no action at all in their case. As I say, this is really minor compared to the issue of what we should do about most poor people.) What’s to argue?

As for raising the minimum wage to a living-wage level, I quite agree that that could be economically tricky (although the cities such as Baltimore that have enacted living-wage ordinances haven’t had financial problems with it; I collected some cites on another thread where we were discussing this but don’t remember what it was—I can dig them up again if you want to pursue it). Therefore, if we don’t want to mandate that working people must be paid a living wage, and we want working people to have enough to live on, then we’re back to facing the issue of what kind of incentives and assistance we should provide for them. About which, as I said, we don’t seem to be in substantial disagreement.

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just a nit: minimum wage levels are calculated using highschool students and wait staff. As a company that employs 16000 “minimum wage employees” I can state that a vast majority of those workes are not adults who fall into the “working poor” category. Most are teens living at home. And none of the wait staff make what they declare on the 1040. Average pay is just over $10/hour.

You see, tax cheats are not exclusively fat, rich, middle aged white guys puffing stogie.

Kimstu, I agree with thte general principle that we should keep the poor out of desparate circumstances. I think we merely disagree on the level of aid. As a general rule, I am opposed to rewarding failure. I am not so sure that offering even more benefits will save us money. The system is alittle too kind right now.

As for the definition of socialism, I think we all have our own. I consider America to be 1 klick to the right of socialism. But oldscratch will clearly set me straight.

100

Well, shucks. That’s what I get for posting late at night from home. I thought I remembered from some analyses I had done several years ago that these folks did in fact have the highest marginal tax rate. Based on what little I could come up with in the office this morning, it appears I was wrong (but not “very wrong”).

Let’s take a mother with two children, earning income in the range of the EITC phase-out (according to my 2000 Master Tax Guide, $12,500 - $30,580 in tax year 1999). This mother pays a 15% marginal rate (again, according to my Master Tax Guide). So, $1 of income means taxes increase by 15¢. Yeah, 15% is much lower than the 39.6% top marginal rate.

Oh, wait a minute…her EITC is affected too, isn’t it? Lemme check my Master Tax Guide…oh, that doesn’t have the detail necessary. Let me go to my copy of the IRC–unfortunately, four years old, but I don’t believe there have been any changes since then to the EITC.

Aha…the EITC phases out for this mother at 21.06%. What does that mean? That means for each additional dollar she earns, she loses 21.06¢ of her EITC. Let’s add 15 and 21.06, and what do we get? 36.06. For each dollar of additional income, this poor woman loses 36.06¢ to the Feds. Is that not the definition of marginal tax rate? I suppose I could have been clearer and said marginal effective tax rate (and for taxpayers with two or more kids–hey, it was late).

Be that as it may, I was wrong. These folks don’t face the top marginal rates, they face the second-highest marginal rates, behind those in the top bracket. Anyways, the point is that this incentive isn’t all it’s cracked up to be–I’d say the phase-out poses a very serious disincentive for those receiving the maximum EITC.

Oh, and nice attitude, DITWD. Nice sig, too…