You know, I tend to agree with you generally. But I’m not sure I want to write off the 13 kids because their mom is a fuckup, and I’m not sure how to help them without the mom being in the loop.
Realistically, I feel we need to both break the cycle of welfare dependence, while also providing some minimal subsistence-level support for even those who refuse to care for themselves (whether or not they are mentally/emotionally capable of appreciating their situation.) I suspect any society will always have SOME number of members who refuse or are unable to participate in the society’s accepted practices.
My preference is not to live in a society that simply allows folk to drop off the bottom rung and starve. And I feel simply urging folk to pull themselves up by their bootstraps may not be sufficient.
I think the idea of a safety net (for life) encourages those people to do nothing. That mindset not only hampers them or their loved ones, it hampers society.
At some point, those in power will need to make some hard decision on whether or not those 13 kids are worth X to society. I imagine it would depend on society’s ability to absorb them. I feel this is a death spiral and that more and more people will be in that loop if left unchecked.
I could be wrong, but history is pointing the other direction.
Granted there are a whole lot of problems intermingled (Immigration being a big one)
Do we euthanize those who do not contribute sufficiently? Just trying to figure out how harsh you will be?
Heck, I’d probably go for forced sterilization if a sufficiently safe, noninvasive (yes, I realize ANY constrain on repro is invasive), and reversible method were available. But I don’t see that as ever being polically possible (nor am I sure it SHOULD be.)
In my mind, the best practical move is to create a safety net which is low enough to discourage folk from willingly jumping into it, while providing treatment for those who are not able to fully participate in the society/economy.
The trickiest part is figuring out how to provide opportunities for the least capable to become contributing members of the economy. Repubs would say let the market take care of it. As I see employers slashing full-time jobs and bennies over the past decade, I’m not sure I’m comfortable in giving that function to private enterprise. I’m not sure tax breaks and other incentives have effectively “trickled down” to folk needing unskilled work which supports a decent quality of life. Instead, we’ve mainly seen the rich get richer…
I think the first thing you’d need to do is handle those things to directly affect that safety net. IF one of the main problems is immigration, then that needs to be taken care of first. If immigrants want to be here, they can’t fly under the radar anymore.
I agree that the safety net needs to be low enough that it encourages people to go find work.
I say nothing about those who can’t work (that is why we need a safety net)
Mass euthanization for all those making under 30k/year (I kinda like it)
The forced sterilization is interesting (in that, it would work but is entirely impossible)
I don’t really see immigration as being a problem - at least WRT able-bodied folk willing to work. My impression is that the largest part of folk trying to come here are looking for oportunity - and generally work their butts off. Moreso than many folk who were born here, unfortunately.
I do have issues with immigrants lacking a “sponsor”, or whose situation is such that they are liely to draw from rather than contribute to the economy.
I’m sorry I didn’t reply sooner. I don’t really feel better, because there is more they want to take away from us. It’s not just a pay freeze they’re looking at. I believe that at some point, we will see more take-aways, but I’m not saying it’s going to happen right now. It’s happened before, there’s no doubt it’ll happen again.
To address point number 1: Yes, now that I’ve got a lot of years invested in federal service, and top blocked employee evaluations for all those years, I’m safer than those in private industry that have been laid off.
Point number 2: I know the common thought is that our retirements are very generous. I think that depends on which retirement system you’re in. There’s the old plan; Civil Service Retirement System (CSRS); and the new plan; Federal Employee Retirement System (FERS). I’m under the “new” plan, which was foisted on us in the 80s. It is not as generous as the old plan. Ours is a three-tiered plan which consists of Social Security, a very teeny-tiny pension kind of thing, and the Thrift Savings Plan, where we take a percentage of our salary and have the option of investing it in several types of funds. Those funds and our retirements, really took a hit when the economy tanked. Really, this where most of retirement funds will come from if we’ve invested enough and we guessed right, and the economy doesn’t tank.
We have a minimum retirement age, which is based on one’s date of birth. So, at my minimum retirement age, I’ll have 37 years of Federal Service in, but probably won’t be able to retire. That’s just because I don’t feel there will be enough in my retirement to make it. I may have to wait another five to 10 years.
I’m not prior military; my whole career has been federal service. I clawed my way up the food chain from a GS-02 clerk typist position. I’m a GS-11 now and don’t anticipate going beyond a GS-12. That’s mainly because 12 and above openings are rare in my field on my installation.
Someone upthread said GS-12s don’t work hard for their money. I know this is only anecdotal, but in my experience, the 11s and 12s in my organization work damn hard. We have to; we work for a military medical treatment facility. We put in a lot of extra hours and really the most we get out of it is comp time, because we cannot be paid straight time and half due to a pay cap. The problem is getting to use the comp time. Most of us don’t even claim all we are entitled to. This is not a gripe; just a fact. It’s part of sucking it up, which we do daily.
I’m going to link to an article I just read. In it, they talk about how they want to change our benefits; health, retirement, etc. Also, it addresses all the hoopla about whether we are underpaid or overpaid. Everybody uses different statistics, and of course, they’re going to use the stats that most favorably reflect their POV.
Finally, I’m acutely aware of private sector woes. My husband is a truck driver for a major national company. His company went to “performance pay” some years ago now. His paychecks are never the same so we can never plan on a set amount of income. We only know that my income is the same; every other week. That’s another little piece of “security” that I’m talking about. The health insurance premiums through his company are ridiculously high, so that’s why I pay for our health insurance. His 401k plan, however, is way more generous than my retirement plan. Because my husband has a lot years with this company, he’s somewhat safer than the newer drivers (non-union company, BTW). However, we see the newer drivers fired on the spot for the least little infraction. One little mishap, and they’re gone.
This is getting really long, so I’ll quit for now.
I don’t have the answers and never claimed to have them. I wish I did. Regardless, of all the retoric flying around out there, we are all paying in some form now. We need to be united, not divided. The politicians are doing a good job of conquering by dividing, and we’re letting them do it. No, I’m not picking sides. Right now, both sides disgust me.
I agree we need to adjust gfor hours worked but even after adjusting for hours worked, government lawyers make a lot less money than the private sector lawyer they deal with and the disparity (even within the legal profession) widens considerably as you get mroe senior.
For example. The large law firm partner might make 2 or 3 million dollars a year while a top government lawyer is not likely to make more tahn about $150K (the chief justice of teh supreme court makes about $250K)
Why set the bar so low? Why not $100K? We can replace virtually everyone who makes less than $100K with Chinese, Indians and Mexicans. Or how about we euthanize the poorest 10% of the population every year, keep everyone on their toes.
How about a One Child policy for anyone making less than $100K and a forced contraception (or perhaps euthanization) for anyone on any form of public assistance.
There are all sorts of ways we can turn ourselves into Communist China or Nazi Germany.
I hate welfare states. To be exact I support there being a welfare system that provides a hand up, not a handout.
But I will not ever support a system that scraps welfare, encourages jobs to leave the country, and leaves six million people without jobs for over half a year and then tells them to go fend for themselves.
A society like that is not a society. It is a jungle and should be classified separately as such.
I assume you have a point in there somewhere but I fail to see it. The 19% is consistent. Tax revenue from different sources have waxed and waned over the years yet federal revenue remains close to 19% of GDP. Most tax increases are not offset by tax cuts elsewhere.
Incorrect. We can either cut spending or a combination of tax increases and spending cuts. The problem with raising taxes is that the spending cuts never materialize. Reagan was hoodwinked by that very idea. He was promised $2 in spending cuts for every $1 in tax increases. Well, we got the tax increases…
And, yes, taxation distorts economic behavior. Actually, more of the so-called “rich” will effectively take their money out of taxable investments. So, the result is less money being taxed at the higher rate. Don’t you get that? You sound like a businessman claiming that the only way to make money is to raise the price of your product. Doesn’t it seem counterintuitive that lowering the price of a product brings in more money? Can’t you see how that relates to tax revenue?
How, exactly, would lowering the deficit drag demand? If you are referring to tax increases then, yes, you are correct. Otherwise, that needs an explanation. I agree that we should look at different tax cuts but you can forget about AMT. That is a political football that gets kicked around every year by both parties. Extra spending would do nothing in the long term for the economy.
My point is that one line on your graph represents top marginal tax rates. Another line on your graph represents all revenue including social security and medicare. When you recognize that we collect 80% as much in social security and medicare taxes as we do in income taxes (What are the sources of revenue for the federal government? | Tax Policy Center), it gets pretty hard to say "look tax rates have fluctuated over time and yet the total federal revenue has remained fairly constant between 15 and 20% of GDP (never mind the fact that this sort of fluctuation is huge, right now federal revenues are at 15% of GDP, if they were at 20%, we would have a surplus next year).
As to your point regarding tax increases not being offset by tax cuts… its not obvious but when top marginal tax rates have gone down in the past, they have often been accompanied by tax increases.
For example, in 1986, Ronald Reagan cut the top marginal tax rate but at the same time he eliminated all sorts of deduction (the most famous (at least among tax lawyers) being passive activity losses), which mitigated the revenue effect of the marginal rate tax cut. Changes in the Earned income Tax Credit and other tax expenditures have shifted over time as well. My point is that the tax system is a lot more than the top marginal tax rate and when top marginal tax rates are cut, there is usually a compromise somewhere to maintain federal revenues (this was not true of the Bush tax cuts but thats part of why they were so irresponsible).
Well I guess that depends on what you consider to be on the table. Presumably any cuts in medicare and social security benefits would go towards making them more solvent, we’re not going to cut benefits and then take the extra money to pay for food stamps or the military, are we? Presumably defaulting on the national debt is not on the table.
So that being the case, we have a 1.2 trillion dollar budget of which 800 billion is defense and security and $400 billion is everything else. The current deficit is 1.3 trillion but after we are done with the stimulus package, our deficit is projected to be about $400 to $600 billion/year. How do we get to a balanced budget with spending cuts alone? Are you proposing that we take up the CATO institute’s proposal of eliminating virtually every other executive department other than Treasury, State, Justice, Interior and about 80% of the Defense department? In other words eliminate or severely reduce:
Food Stamps;
Welfare;
Guaranteed Student Loans;
Pell Grants;
College work study;
Free School Lunch (I’m not sure about this one, I “think” its part of the Dept. of Ed but I could be wrong);
Eliminate the department of Energy and all the research that is going on there (basically they want to eliminate the Dept. of Energy);
Medicaid;
Public Housing (including Section 8);
Federal employment and training programs;
End all transportation subsidies (which would effectively eliminate Amtrak);
Privatize air traffic control;
Earned income Tax Credit;
Child Tax Credit;…
The list is pretty specific and its pretty long and it balances the budget without tax increases… BARELY. So if there is ANYTHING on this list that you want to keep or avoid cutting, you will have to find a spending cut that CATO institute couldn’t identify OR you will have to raise taxes. I suppose we could balance the budget if we reduced the size of our military to match our spending as % of GDP to match our NATO allies.
I don’t remember any tax increases under Reagan. Are you sure you know what you are talking about?
In 1986, Reagan tried to cut a deal where he could cut taxes and cut spending but he couldn’t get the votes for cutting spending so he decided to cut taxes in 1986 and come back later for the spending cuts, which he never bothered to come back for.
Really? What tax free investments are the rich investing in? have you ever heard of the AMT?
We hardly tax investments at all these days with a 15% capital gains and dividend tax rate. Even at 20% (the Clinton rates) they would be at least as low as the lowest rates charged under Reagan, they haven’t been this low since the great depression.
The top marginal rates largely apply to interest (within the investment world). Investment in Muni’s is severely limited by the AMT and the fact that most financial institutions have muted tax benefits from holding Muni’s if they have any debt of their own.
I don’t really think its an apt analogy but are you familiar with the concept of monopoly pricing? Its how you would maximize revenues in the absence of competition. It is not only useful to monopolies, it is useful to any business that sells a product that is NOT a commodity.
I’m not saying that the purpose of the federal government is to maximize its revenue but the notion that it won’t increase revenue by increasing tax rates is hard for me to grasp because it flies in the face of so many axiomatic economic concepts.
I’ve already said that taxation distorts economic behaviour but you seem to think that it distorts economic behaviour SO MUCH that the tax revenue is basically a wash.
lets say that all your income was taxed at the top marginal rate of 35%. Lets say you earn $1,000,000 so your taxes are $350,000. You’re saying that if I increase your tax rate to 39.6% you will somehow reduce your taxable income to $883,838 and end up paying the same amount in taxes? Which will reduce your take home by $116,000 (show me how you would reduce your taxable income without reducing your actual income using a method you would not already be engaging in at a 35% marginal tax rate).
I deal with taxes and tax policy for a living and I’m telling you that you are wrong. At these tax levels, raising taxes raises revenue on an almost one for one basis unless you are talking about severe tax increases (and increasing the top marginal tax rate from 35% to 39.6% is not severe, increasing the capital gains rate from 15% to 20% is not severe (although raising dividend rates from 15% to 39.6% would be severe enough for people to reverse the shift of capital flow from equity to debt and perhaps even take some of their money out and enjoy it rather than invest it). Rand Rover (another tax lawyer) who is almost diametrically opposite to me on the political spectrum will probably agree with me. He will argue for lower taxes but his rationale won’t be “raising taxes doesn’t raise revenue”
IANAE but I deal with economic concepts on a daily basis. When you cut food stamps then the people who get food stamps will have to cut back spending somewhere and demand drops. When you cut NASA spending then all those companies that sell stuff to NASA, sell less stuff and demand drops. You cut federal wages then the federal employees have to cut back somewhere and demand drops (probably by less than cuts in food stamps would cut demand because a lot of federal employees will simply reduce investment). Now if you were operating on a balanced budget then you would say "well that’s fine because now the taxpayers have the money so its basically a wash because they will either spend or save their money according to their marginal propensities to consume or save. On a balanced budget, the federal government can shift the economy towards more consumption (by increasing taxes and increasing stuff like food stamps and unemployment) or towards more investment (by direct investment in stuff like roads and bridges or by lowering taxes on investment income and cutting stuff like food stamps) but the net amount of money in the economy changes only a bit at the margins. Deficits on the other hand produces exogenous money. If we start with a balanced budget and we increase spending without increasing taxes we end up with deficit spending which will boost demand or investment (depending on where you spend the money) and create a deficit because you spent money without taking any money out of the economy in the form of taxes (at least not immediately). If we start with a balanced budget and cut taxes you will boost demand or investment (depending on how you cut the taxes) you will create a deficit because you cut income without cutting spending.
So if you have a deficit, you are effectively creating consumption or savings that the economy did not organically produce. If you cut that deficit, you are reducing the amount of exogenous consumption or savings that the deficit allowed. Its a lot more complex than that but its probably close enough that we can use it for purposes of discussion.
I’m sure there are some cuts that could be made in Defense spending. Also, the majority of the programs listed are social welfare programs that, in theory, should cost less as the economy recovers. As for SS and medicaid we, as a society, must decide whether we want these programs to continue. I, for one, have no problem with raising SS and medicare payroll taxes if we, as a society, demand those benefits regardless of income or total worth. Either we decide to eliminate the programs for future generations, means test the benefits, or pay the price.
Sure do. Reagan increased taxes on business in '82, increased payroll taxes in '83, and higher energy taxes in '84. There is a chart on this Wiki page: Reaganomics - Wikipedia
Who said they have to invest in anything. If the return is no longer worth the risk then they can stash their money under the mattress. At any rate, the 2003 capital gains tax cut resulted in a large increase in revenue. See table 4-3: http://www.cbo.gov/ftpdocs/77xx/doc7731/01-24-BudgetOutlook.pdf
I don’t think that analogy makes much sense. The government is not providing a direct good or service for the money they take. Also, in the absence of the government taking MY money I can still get the government services. So, the incentive is to hide my money from taxation (legally or illegally).
No, it really doesn’t. You are just thinking about it in the wrong way. Taxing anything produces less of it. Increased income taxes discourages working longer hours and getting overtime. Increased capital gains taxes discourage investing in general, and risky investing in particular. In contrast, much like lowering the price of a good allows more people to purchase it and increases total sales, decreasing tax rates encourages people to do more of the behavior being taxed and will result in a total increase in tax revenue.
No, not a wash. I’m sure there is a sweet spot where government can maximize tax receipts. Simply raising taxes on the rich is not the answer and often has the opposite effect. Ask the governor of Maryland: Maryland's Mobile Millionaires - WSJ
See the above links. Yes, these are states and people cannot dodge federal income tax in quite the same way…yet dodge it they do. Here is an interesting article on tax reduction and revenue:
This implies that any stimulus from a redistributive program is artificial. So, yes, cutting back on that will have a drag on the economy if viewed from this artificial level. In a perfect world money not given to a food stamp recipient or to a federal employee would be given back to the original earner. That would have no overall effect on the economy. I can see that, if the money is taken but not given to someone else, that this will produce some drag on the economy.
OK, so first, I acknowledge that raising tax rates may very well lower revenue for any number of reasons. So there’s that.
But I think that WSJ article is a hack job. It’s basic claim is that raised tax rates caused the wealthy to relocate – with the effect of lowered revenue, due to a smaller pool of taxed income. Except that there’s a more obvious explanation, one which is given a single sentence (as brush-off):
What’s a “big part”? Doesn’t it make sense, in an article containing lots of numbers in support of their argument, to quantify the impact of the worst recession since the Depression? What’s the recession’s relative impact on revenue as compared with that of “mobile” millionaires? We don’t know…I suspect because including that information would weaken (if not overwhelm) the piece’s claim.
I have no idea where to go to check these numbers. But I did find the State Budget Highlights, FY2009 (direct pdf link to Maryland State website). On page 6, it lists revenues for '07, '08, and '09 – except for 2 cases, all revenue numbers increased. The 2 cases where revenues went down were: Corporate Income Tax '07 -> '08, down $54M (subsequently up $137M in '09) and Fund Transfers '08 -> '09, down $821M (but from '07 to '08, up $838M; since I don’t know what it is, I have no explanation).
I’m fairly ignorant economics-wise, and I may very well misunderstand what I’m looking at. But I’m not stupid – from what I see, the numbers don’t jive; from what I can tell, it’s a bad argument that’s been put forward. I welcome any correction, as it can only help me understand these things better.
At any rate, I have neither the time nor the interest to check more cites, but I sure hope they’re better than that one. And a big “For shame!” to the WSJ.
The fact is that people are fleeing high tax states like MD, NY, NJ and CA. States with low or no income tax are getting an influx of new residents. Draw your own conclusions. Just think about how much revenue NY lost due to Rush Limbaugh alone moving to FL.
Which, unsurprisingly, doesn’t actually address my/the point. Honestly, it shouldn’t be that difficult for someone who has the data cited in those articles to also supply a figure for the (relative) impact of the recession. But contributors to the current incarnation of the WSJ opinion page have an axe to grind, and grind it they will.
Longer is not the same as better; it doesn’t do the work you want it to in supporting your original point. Again, let me acknowledge the fact that raising tax rates may have the ultimate effect of lowering revenue. As you have acknowledged, there’s a “sweet spot where government can maximize tax receipts”.
But your response to Damuri Ajashi was that taxation’s distortive effect on economic behavior (and the resultant revenue) was – definitively, by my reading, though you included some slight waffle wording – “not a wash” (bolding mine). The cite about Maryland’s “mobile millionaires” was supposed to support that assertion. The fact is that the articles are inconclusive concerning their primary assertion (that higher tax rates are the direct and primary cause for relocation). Putting that aside, the articles don’t actually support your assertion, even if Maryland’s higher tax rates are the direct cause for people leaving the state. The higher tax rates may still be a revenue wash.
There’s no reason anyone should have to draw their own conclusions on this matter. IMO, there is little reason for the authors, with the data available to them, to be so sloppy in making their case – beyond laziness, an unwillingness to be proven wrong, and/or actual dishonesty. I suspect some combination of all three are at play…a hack job.
Here’s an op-ed from Laffer and Stephen Moore which addresses this issue and points out that the rich were disappearing during the stock market boom (i.e. not just a reduction in income could account for the loss of all those rich folks):
I don’t know how these numbers are calculated. I doubt that journalists or economists have access to specific tax returns that they can compare year-to-year. My guess is that they have to rely on data released by the state which, I would assume, the states are not too eager to put out. Alternatively, they probably are limited to doing crude counts of tax returns in certain income ranges.
