To continue on John Mace’s hijack- I think that the tax cut is a horrifically bad idea, because it is a gross misinterpretation of the appropriate action in recessionary times. I have no problem with the US gov’t running a deficit in a recession, but I think that the right thing to do is to spend money on things that actually stimulate the economy, like improvements to the transportation system (e.g. federal $$$ for the roads). That way, jobs are created, because there will be a need for employees to do the road work, and it will make the movement of goods easier, reducing costs for companies.
There is no guarantee that if the money is returned to the taxpayers that they will reinvest it in the economy, which is really the point of the tax cut. Also, this will create larger deficits down the road, which will have to be paid back at some point, probably at around the same time that the baby boomers really start hammering the Social Security system…
All that said, I do not want the economy to continue to falter, but I do not think that this administration’s policies will help at all.
And, I wish the &^%(&^% Democrats would start hammering Bush on this point.
WWWMillionaireToBe: I have a brillaint idea! Bricks! We’ll sell mail-order bricks. Hundreds of different models and colors of bricks.
Investor: Son, that’s the dumbest idea I’ve ever heard. Nobody will pay for cross-country shipping on bricks.
WWWMTB: That’s why we’ll offer free shipping! We’ll crush every mom and pop brick seller out there, and every brick sold in this country will be ours!
I: Free shipping? On bricks? Son, that’s the dumbest idea I’ve ever heard.
WWWMTB: We’ll make it up on volume!
I: You’re going to take a loss on every purchase…and make it up on volume. Son, that’s the dumbest idea I’ve…
WWWMTB[Cutting off Investor]: But we’ll be doing it by a web site! The New Economy!
I: Who do I make the check out to?
The Prez has just passed a $350B tax cut. If the sunsets actually hold (anyone actually betting that way?), that $350B will all happen in the next 3 years.
If we took that $350B and instead gave $3500, on average, to each of the 100 million least well off Americans over the next 2 years (let’s say half this year and half next) that money would be spent. Quickly, mostly locally, with the attendant multiplier effects. That would simultaneously create jobs and benefit the persons most needing help.
We disagree in our view of who is doing that. As Warren Buffett has pointed out, Bush’s original plan would have resulted in Buffett’s being taxed at lower rates than his own employees.
I was planning on some biting sarcasm here but I got over it. Instead I will try asking nicely.
You simply must understand the difference between one person’s tax cut and the entire tax cut. One is very small; the other is very big. It should also be clear that while a small amount of money wouldn’t help the poor, a lot of money could. What I don’t understand then is why you felt the need to point out the obvious. Yes we could donate our share of the tax cut. But we would rather do something to really help the poor. Am I missing something? Is there really some point to your comment?
Also why is it that it is only income taxes that are being cut? You could very easily cut taxes on the lowest 10% of earners if we looked at other forms of taxation. This is why people like RTF and I believe that the conservatives are attacking the poor through these tax cuts. Bush is only cutting those taxes where the rich pay more. And since there are no spending cuts what that means is that more of the tax burden is being pushed off onto the not-rich. So the poor are paying more while those at the top, those who have benefitted most from the system, are paying less. Who are the class warriors again?
If many people think as you do, and they all gave their tax cuts to the poor, then it will not be a small amount. I won’t question your integrity, but I’d be willing to bet that not even 10% of those who think like you will actually give their tax cut to the poor. I think that says something. I could be wrong, and would be interested to see what a poll taken later on would show on this subject. What do you think?
The president can’t cut your state taxes or sales taxes. And go ahead and try to cut FICA taxes (good luck). Essentially the income tax is the only tax the president can do anything with.
No, but he can recognize their regressive nature, and take into account the overall shape of America’s taxes as a whole when he chooses what sort of tax policy to push in Congress.
And we can see what he does with that: he gives huge cuts at the top, and negligible cuts to lower-income people.
The tax on dividends is a case in point: it’s part of the income tax structure, but this particular aspect of the income tax is overwhelmingly beneficial to the rich, because they own most of the stock. (Any tax cut on income from property is going to be disproportionately kind to them that already has, since they’re the ones who have property.)
You mentioned FICA; even Time magazine has mentioned the double-taxation involved there. (Can’t link; it’s too old; back in January or February.) Bush maybe can’t cut FICA, but he could have proposed that the share of one’s income that pays for FICA be exempt from taxation.
There are lots of things you can do, just with Federal taxes, if you really want to help average Americans, rather than the well-to-do. But this administration isn’t doing them.
The Democratic Party doesn’t need the economy to stay sluggish for the next year and a half (though I think it will). As the quagmire in Iraq, and to some extent Afghanistan worsens, and the foolishness of the military adventure in Iraq becomes more apparent, it’ll be a rallying point of opposition to the Repubs.
Add in the mounting deficit, higher state and local taxes, environmental degradation due to Administration policies and sweetheart deals for big corporate donors, and there’s plenty for a good Democratic candidate to work with.
I don’t know where you live, but my state income tax is not “regressive”. Some states have no income tax. Some states have no sales tax. If I were looking for blame in this area, it would be aimed at the states (or the state you live in). States can make their tax codes more in tune with the feds if they really want to help their residents. Expecting the feds to link up with the states (with many different systems) is bass-ackwards.
Dividends come out of post-tax money, as you know.
I’d agree to have FICA deductible, but that would also benefit “the rich” more than the poor, BTW. And the very poor would not benefit at all since they pay no income taxes and hence have nothing to deduct against.
I’ve been a taxpayer in Maryland, Virginia, and South Carolina. In Virginia, I reached the top income tax bracket while working as a paralegal. Maryland and SC weren’t significantly different in this regard.
I’m aware that some state income taxes aren’t as regressive as those of the states I’m familiar with, but (without having done a detailed survey) it’s my understanding that states with significantly progressive income tax rates are the exception.
Sales taxes are of course even more regressive than income taxes.
I’m not blaming anyone for the way it is, because that’s a waste of time.
But when you change one part of a larger system, does it behoove you to think about how it fits into the whole system? Darn tootin’, IMHO.
To the extent that the vast majority of states have something big and obvious in common, I can’t see why it’s bass-ackwards at all. Besides, it’s easier to adjust the tax laws in one place than in 51.
And if I worked for a private employer, I could say the same about my salary. So what?
Except that in both cases, there’d be a good chance that it wasn’t true. Corporations have done an effective lobbying job over the years, resulting in many profitable corporations’ paying no income taxes.
Hey, I’m glad we agree on something.
Not anything like cutting the tax rate on dividends does. What’s the ceiling on FICA taxes now? Somewhere around 100K, IIRC. Tax? 7.65% = max of ~ $7650. Tax savings in 35% bracket? ~ $2700, even if you’re Bill Gates or Warren Buffett. Meanwhile, the guy making $20K in a 15% bracket saves $230. Sure, Gates and Buffett get more, but not astronomically more.
Can’t always do everything at once. But if it would make you happier for it to be a Federal income tax credit for the FICA payments, rather than simply excluding them from taxable income, we could do it that way, and that would fix the problem, at least for those poor people who filed their taxes to get the credit as a refund.
Of course, a credit would be several times as costly as an exclusion from income, and unlike the Bushies, I don’t regard structural deficits as something we can live with. So the problem of how you pay for it kicks in. Guess it’s just the exclusion after all, and we figure out some other way to help the working poor who owe no income tax.
Of course, my original idea - average of $3500 over the next two years to each of the 100 million least affluent Americans - would help those folks, and would cost no more than the face value of Bush’s tax cut. And would likely stimulate the economy a heck of a lot better.
You and I could debate details of the tax code all day and probably never reach agreement in any significant way because (I think) we have fundamentally different beliefs about what the tax code is for.
I’m not in favor of using the tax code for income redistribution, social engineering, or economic stimulus. I favor using the tax code for one purpose only: raising moneys for the gov’t in a way that interferes least with the economy and spreads the burden evenly among the citizens. Additionally, I believe the fed budget is significantly larger than it should be, and needs to be reduced. To the extent that a tax cut moves us closer to that, then I’m in favor or it. Which generally means that I would favor just about any tax cut that came along.
It appears you favor exactly the things that I do not, ie, income redistribution, social engineering, and economic stimulus. I don’t mean to put words in your mouth, and perhaps you do not favor those things, but that’s the conclusion I would reach from reading your posts. Feel free to correct me if I’m wrong.
And we’re getting WAY off topic here, so perhaps we can debate tax codes another day in another thread where we look more at what the purpose of a tax code is and how best to achieve that purpose. I’ve already done that in this thread which I started a few months back. I don’t believe you participated in that thread.
And? I’ve come across Democrats who would certainly consider a little short-term suffering as a worthwhile price to make people pay in order to get them to vote for their party. Likewise, I’ve come acrosss Republicans with exactly the same attitude, although their big thing is hoping for some kind of attack on US citizens to get people all law-and-order enthusiastic.
Getting back to RTFirefly’s original point that state and local taxes as a whole are regressive, here is a link to a study showing that is indeed the case.
Yeah, and it’s basically all due to sales tax. Big surprise. Note that CA, the largest state by far, is in the “progressive” category. Why should the 30M plus residents of that state end up with more “progressivity” due to the fact the other states are more “regressive”?
I stick by my orginal claim. There are so many state codes out there that to ask the feds to take this into account, in addition to everything else, is just not realistic. Get the states to clean up their act, and leave the feds out of it.
Take, for example, the tax on tobacco. A favorite tax of the social engineers. Who does this fall on the most? The poor, who are more likely to smoke in the first place. But one could argue that this is a purely voluntary tax and can easily be elimintated with a simple lifestyle change.
(1) How do you define income redistribution? The “re-” implies you know what the correct distribution ought to be and yet you don’t explain how you know that. And, you can’t say “let the market decide” because we all know that various decisions we’ve made concerning our marketplace (corporate law, patent law, …) have distributive implications. Plus, you’ve got to raise the money somehow and it is not clear that “taking the same percentage of money from each person” is less “redistributive” than other options.
(2) When you say that you don’t like using the tax code for “social engineering”, then how do you propose to deal with things like externalized costs in the market system? Or are you one who believes in the “free market” as an article of religious faith rather than in the economic science (to the extent that economics is a science) of market economics?
(3) When you talk of a taxation system that “spreads the burden evenly among the citizens,” what do you mean by this? Surely, if we want spread the burden in the sense of minimizing the total burden on citizens, we will tax progressively because the burden on rich people by taking say 30% of their income is less than the burden of doing the same to poor people. [One can use the general economic principle of decreasing marginal utility to show this to be true in a more rigorous manner.]
This is the last post from me in this thread. I’ll be glad to debate tax theory with you and others, including the details of your last post, if you want to open a thread dedicated to that purpose.
I don’t understand the relative merits of a consuption based tax vs an income tax to make a judegement if one would be better than the other. So, assuming that we’re dealing with an income tax only (and I think this is a safe asssumtion for the duration of my time on the planet), I’d prefer a flat tax of x% with no exemptions other than a fairly large personal exemption of y% (indexed to inflation).* That gives the gov’t two levers to adjust. I’d start with figuring out what “y” is. Probably somewhere around $15-20K. Then I’d set “x” to be whatever it had to be to raise the necessary money. I’d strongly encourage the states to do the same. Simple, clean, fair.
We’d have to phase this in over time as a sudden switch would probably be too much of a shock to the system. I don’t know how long it would take-- 5yrs, 10yrs, maybe longer. That’s a detail that can be worked out by people more knowledgeable than I.
*no mortgage, no child, no charity, no state income tax, no real estate tax, no…
Undoubtedly so. But I enjoy debating with you anyway, because you argue your positions honestly, and you don’t seem to adopt them reflexively.
See, here’s the problem, which jshore has already raised: what constitutes “spread[ing] the burden evenly among the citizens”? Because you and I agree that that’s what’s right, but we clearly have vastly different ideas of what that means.
I think it’s a perfectly honest philosophical position that government needs to be drastically shrunk. I disagree, of course, but like you say, our philosophies are very different.
What I can’t understand is the apparent willingness of conservatives to saddle the government with seemingly any amount of debt in order to accomplish this purpose. Is there a point at which the inevitable cost of those deficits is greater than the potential benefit of reduced government?
After all, it’s only a potential benefit, and it depends on the Dems being grownup and saying we can’t afford new programs because it’ll make the deficits too big, even though the GOP didn’t find that a problem when it came to cutting taxes.
It’s possible that one of these days, neither party will be willing to be the grownup, and we’ll have both expanded government programs and perpetual tax cuts and borrowing, until the revenue from taxes does little but service interest on the debt.
Income redistribution through the tax code is a matter of definition, so I’ll skip by that.
But do I believe in social engineering? You betcha. It’s quite clear that there are many ways to run a society. I’m in favor of societal structures that encourage all citizens to be economically productive, to save and invest, and good stuff like that. If you believe that those social structures will just naturally happen if government gets out of the way, then you don’t believe in social engineering. I don’t believe that, so I do believe in social engineering.
For instance, I don’t see where government is interfering with the mass of citizens saving enough to fund their retirements. But it’s not happening on its own, and maybe we ought to see why, and whether we can better nudge people to do so. That’s social engineering, and if it should be successful, people will live better lives as a result. I wouldn’t let a religious principle stand in the way there.
I’m also aware that there’s a lot of public social engineering by private interests. I think it’s stupid to say it’s OK if Philip Morris and McDonalds engage in social engineering, but bad if the government does it. Much of the ‘social engineering’ I seem to be guilty of being in favor of, is simply a matter of blocking social engineering by private interests.
Sorry I missed it. I seem to swing back and forth between being an active player in GD and being totally absent from this forum.
One more note, then back to work: social engineering is. There’s no getting around it. The only question is, what shape it takes.
Take our system of crime and punishment. Relative sentences, and the effort put into prosecuting some crimes at the expense of others, is all social engineering. If the guy who coshes me over the head and steals my wallet serves the same prison sentence Jim Bakker got for defrauding his tele-flock of tens of millions of dollars, or as big a sentence as any Enron exec is likely to see (and in a nastier prison, no doubt), that’s social engineering. It’s all around us, like the air we breathe or the water fish swim in. It’s in stuff we take for granted so thoroughly that we forget about it. It just is.
The only question is, do you want to invest the social engineering implicit in the society you grew up in with some sort of status of being handed down from the throne of Zeus, or do you want to think about whether some other set of ways of engineering people’s behaviors might make more sense?
RTFirefly has very eloquently made the case that social engineering exists whether we want it to or not. (Very analogously to the fact that distributive decisions exist whether we want them to or not.) But there was one more thing I wanted to comment further on:
One problem I have with this attitude of “cut taxes and then force the government to cut back” is that it leads to incredible political dishonesty. What people basically want from government is low taxes and lots of services. George W. is thus currying favor by cutting taxes but he is not actually proposing what to things to cut, which is a way of forcing the decision onto someone else…He wants to “have his cake and eat it too.” If he came out with cuts that would balance the budget (at least down the road; I understand the need to run deficits when the economy is in a slump), I may not like his cuts and argue against them, but at least this would all have a certain honesty to it. Right now that honesty is totally missing.
Here is Paul Starr’s take on it in the latest issue of The American Prospect:
of Bush’s tax cut. And would likely stimulate the economy a heck of a lot better.