Republican? Why?

Great Debates
121

Monster: “Working class”: just an expression. Substitute the phrase, “lower-middle class”, if you prefer.

Here’s the argument in greater detail, though.

Say there are 3 tax brackets, 15%, 30% and 40%.

In my example, you pay no tax on your first $10,000 of income.

You pay 15% on your next $20,000 of income (up to $30,000 in total, right?)

You pay 30% on your next $40,000 of income (up to $70,000).

And you pay 40% on income above that (in reality, the tax is 38.6% on every dollar earned beyond $307,000, for single filers. Ignoring deductions).

OK, now let’s say you drop the bottom tax rate to 10%. (From 15%).

Somebody who earns $20,000 per year will get a tax cut of
5% times $10,000 (or (.15 - .1)*(20,000 - 10000)) = $500.

Somebody earning $50,000 will benefit from the tax reduction over the full tax bracket span of $10,000 - $30,000. He will get a tax cut of $1000. ($20,000*.05).

Similarly, the upper middle class tax payer earning $100,000 will receive a tax cut of $1000 - larger than that received by Mr. 20,000- even though Mr. UpperMiddle did not have his own tax rate adjusted.

Now Scylla will point out that Mr. $20,000 receives a percentage tax cut of 2.5% (500/20000), while Mr. Middle receives 2% (1000/20000) and Mr. UpperMiddle receives a paltry 1%: (1000/100000). Poor Mr. UpperMiddle! Mr. $20,000 is clearly the lucky ducky!

I would say that Mr. $20,000 needs the extra $500 more than Mr. UpperMiddle needs the extra $500, never mind the extra $1000. But that simply reflects (in all honesty) a blatantly liberal perspective.

Conservatives don’t see things that way. They note that the fat cats pay the big bills, transferring money that is rightfully theirs to big government. Or something like that. Big Gov is not entitled to the extra dough anyway, so it’s no big deal cutting fat cat’s tax bills - he still pays mucho dinero. (BTW: Fat cat is not modelled above, as fat-cat by my reckoning earns at least a cool 300 thou).

What’s weird is that Scylla seems to argue for marginal utility declining with income: you need to give Trump an extra mansion too make him feel great, while merely handing a used Miata and paid parking space to flowbark would make his day. This leads to an argument for redistributing income: why not give 200 people Miatas and have The Donald give up one of his Penthouses?

At bottom, I think that a conservative approach to taxation has to dispense with classical utilitarianism and go with some sort of rights-based approach.

At any rate, the above shows that cutting the bottom tax rate will benefit the upper middle class more than the lower-middle class, in absolute dollar terms. Nonetheless, Republicans typically insist upon cutting every tax bracket, magnifying the (absolute) benefits for upper incomes.

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Now Scylla will point out that Mr. $20,000 receives a percentage tax cut of 2.5% (500/20000), while Mr. Middle receives 2% (1000/50000) and Mr. UpperMiddle receives a paltry 1%: (1000/100000). Poor Mr. UpperMiddle! Mr. $20,000 is clearly the lucky ducky!

123

Actually, I should say that an “American conservative” needs to dispense with classical utilitarianism. A Swedish conservative in the 1970s could point to the severe disincentives associated with marginal tax rates near 90%. Meet flowbark: far-left liberal in the US today, conservative in Sweden had he lived there in the 1970s.

As for the US in the middle 1990’s, when the top tax bracket is 39.6%, it is difficult to argue for a relevant Laffer curve or incentive-based argument, though that does not stop certain ideologues from doing so anyway, with little or no empirical support.

124

Related to this idea, here is a nice piece discussing the regressive nature of state and local taxes. So, when people wonder, “Why is the federal income tax so progressive?” the answer is that it needs to be in part in order to offset the regressivity not only of the payroll taxes but also the state and local taxes.

While I know that the federal government does not directly control the state tax systems, I think it is very important to consider all of these issues in the larger context of the overall tax burdens that people pay. In that context, it turns out that Bush’s tax cuts, while very marginally increasing the progressivity of the federal income tax are dramatically decreasing the progressivity of tax burdens as a whole (and even just federal tax burdens as a whole).

So, Scylla, this is an expanded answer to the question of why I am not impressed by Administration aruments that look at percentage reductions in federal income tax burdens only to claim that their tax cuts benefit the poor more than the rich.

125

flowbark:

Say what? I can’t see where I’ve argued this. Please don’t go around attributing crap to me I didn’t say.

jshore:

I’ll be sure and keep that in mind in case I ever decide to ask such a question. Seeing as I didn’t, I have no idea why you are directing this at me.

Seeing as the administration only controls Federal taxes, and not State and local taxes I don’t see how you can blame the results of the latter on Bush, not that I care, or am asking, but since you’ve directed this at me …

126

To turn the OP around – among other reasons, I’m a Democrat because:

  1. I believe in personal accountability
  2. I believe in a limited, but important role for government to protect/support/enrich all citizens, not just those with money or access to power.
  3. I believe we must protect future generations and not leave them with trillions in debt or a environmental wasteland.
  4. I believe in personal privacy and that the government has no role in what consenting, informed adults do in bedroom, in what they read or watch, or in what they ingest.
  5. I believe that religion belongs in the heart, the home, and the church and that government and all its agents should take no actions favoring or disfavoring any religion.
  6. I believe that a world with fewer guns, of any type for any purpose, would be a better place.
  7. I believe we should work to engender these ideals in every country by example, not by force. However, all people are of equal value and, when people anywere are in danger of imminent harm, we should act decisively, utilizing all our resources.
  8. I believe “[t]he Age of Nations is past. The task before us now, if we would not perish, is to shake off our ancient prejudices, and to build the earth.” (Pierre Teilhard de Chardin)

The Democratic Party, the laws its legislators write, and the decisions of judges appointed by Democratic Presidents and Governors support these beliefs more closely than the Republican Party.

127

------flowbark said:What’s weird is that Scylla seems to argue for marginal utility declining with income: you need to give Trump an extra mansion too make him feel great, while merely handing a used Miata and paid parking space to flowbark would make his day.

Ok. First, I’d like to observe that the POV described (and possibly misapplied to Scylla) is not at all exceptional. I consider it common sense. A poor guy gets more out of an additional $300 than a middle class guy does, and the middle class guy enjoys it more than The Donald. This is the theory of declining marginal (cardinal) utility. (It is also about 60 years out of date, btw: modern economics uses ordinal utility and dispenses with interpersonal comparisons).

In my post above, I was trying to compare conservative and liberal POV’s, and was using Scylla as a foil. I will try to refrain from doing so in the future. However, the basis of my claim follows: From here, posted on 9/22/02:
-----Scylla said: “For example, on the tax cut and refund you have a couple of pretty clear positive effects. The refund benefited the poor more than the rich since 3 or 6 hundred dollars means more to them than it does to Mizer Moneybags. Among the wealthy, the tax cut serves a couple of benefits…”
Emphasis added. (I should add that the statement ignores the fact that the refund maxed out at $300 for an individual, but that many received lower refunds. So the comparison is probably more apt between Mr. Middle and Mizer Moneybags. But that’s a side point.)

At the risk of being provocative, I speculate that Scylla has not changed his mind. I’m not claiming that he should have to remember every word he’s ever posted, obviously. I’m just referring to the basis of my remarks.

jshore (and others :wink: ): I agree with you that wise federal policy makers should take the progressivity and other characteristics of state and local taxes into account when setting federal tax policy. It is not so much an issue of “blame”, rather one of not analyzing a particular issue in a (convenient) vacuum.

128

That’s wonderful. It is misatributed and I’m not arguing utility either

However, the basis of my claim follows: From here, posted on 9/22/02:
-----Scylla said: “For example, on the tax cut and refund you have a couple of pretty clear positive effects. The refund benefited the poor more than the rich since 3 or 6 hundred dollars means more to them than it does to Mizer Moneybags. Among the wealthy, the tax cut serves a couple of benefits…”
Emphasis added. (I should add that the statement ignores the fact that the refund maxed out at $300 for an individual, but that many received lower refunds. So the comparison is probably more apt between Mr. Middle and Mizer Moneybags. But that’s a side point.)
[/quote]

It is beside the point. Married couples can get back $600. This is not an argument for utility.

Utility says that $300 is worth more to a guy with a $5,000 net worth than to a guy with a $6,000,000 net worth, and it’s not a useful concept here.

What my quote is trying to show is that a $300 tax refund is more meaningful to a guy who paid $600 in taxes than to a guy who pays $10,000 in terms of easing of tax burden carried. The first person has realized a 50% reduction in his federal income tax while the latter has received around a 3.3% reduction.

I’m not talking about utility at all, I was talking about tax burden.

No. I have not changed my mind. Frankly I’m a little baffled as to how you could expect me to since I haven’t been making a positive argument here, but have simply taken issue with Jshore’s expressing the value of a tax cut based upon how many dollars it returns to various individuals as opposed to the more useful way of presenting it which is as a percentage of tax burden.

Seeing as you’re not really addressing that but instead are utilizing me as your idea of the prototypical conservative/republican discussing taxation I can’t exactly see as how my mind is supposed to be changed.

::sigh:: a couple of things here.

  1. Most states have different tax systems. How the hell is any administration supposed to make a fair income tax system that plays off 50 other differing systems?

  2. If the state income tax systems are out of whack, you don’t fix it by throwing the federal income tax system out of whack to compensate for it. This is a philosophical point that I hope would go beyond partisan politics and that anybody with real world knowledge working with systems would understand and agree with.

Anybody that’s ever tried to fix a car or work on the chemistry of a pool, or plant a garden or tried to fix or adjust anything knows this from experience.

For example, if your old pickup truck is running rough, you may be able to make it run smooth by making your mixture of gas richer. However, if your problem is not one of mixture, you haven’t fixed your pickup truck. You’ve simply masked one problem and created another one. There’s an old mechanic’s saying “one worn part will wear all the adjoining ones,” and it’s an almost perfect truism.

By making your mixture too rich you create all kinds of other problems.

If you try to fix a system like a truck, a pool, a garden, a house, or an economy simply by compensating for existing problems you actually damage it further.

If the spark plugs are bad, you don’t fix it by increasing the mixture you fix it by fixing or changing the spark plugs.

All I reasonably expect out of a Federal Income Tax system is that it be a perfect Federal income system. I don’t think it’s reasonable to expect or argue that it should be a compensation for 50 different State income tax systems all at once.

  1. “Regressive” and “Progressive” are not political statements or statements of value, quality or desirability, and they shouldn’t be used as such. It’s like saying clockwise is good and counterclockwise is bad. They’re neither.

A 3/8 socket isn’t better than a 5/8 or vice-versa. All progressive taxes are not good and all regressive taxes aren’t bad. The tendency for a proposed tax change to be one or the other is also moot as to whether it is a useful or good idea.

A regressive tax burdens the low end of the income spectrum proportionally, and a progressive tax burdens the high end of the income spectrum proportionally. That’s it.

Regressive/progressive are not meaningful descriptors unless they are very well qualified.

We have a progressive income tax system. As such any income tax cut is going to tend to be regressive. The more progressive a tax system is, the more regressive a cut will tend to be. It’s pretty much the nature of the beast. The only way around this is if you choose to whack only the lower tax brackets. However, the more progressive the system, the less there is to whack at the lower end.

Any time a tax is collected by percentage, whether it’s graduated or not(unless it works inversely along the income cureve), it is progressive. Any time a tax is collected by dollars per capita or per good or per sale it is regressive.

That’s all that progressive/regressive means and it’s flawed to use it as a value term.

It’s not.

129

Why I am a Republican?

The first question to ask is why I am NOT an independent. The answer is that I don’t much like the idea of judging politicians as individuals. And except for President, I rarely have enough information to make an intelligent decision about an individual. And, above all, I hate negative campaining, and I think that the #1 cause of negative campaigning is the effort to attack swing voters. So I don’t want to be one of those swing voters politicians twist themselves inside out to please.

As for why I am a Republican, I’d say that I more agree with them than the Dems, but, truth is, I may not have total self-awareness on the whole thing. When Republicans say something stupid, I tend to think they are deep down decent, whereas when Democrats say something stupid, I tend to think they are deep down not so decent.

www.nationalreview.com I almost always love. The Nation I can’t stand. Go figure.

130

Scylla: Ok, let’s start out with the bolded part.

Scylla said in September 2000, “The refund benefited the poor more than the rich since 3 or 6 hundred dollars means more to them than it does to Mizer Moneybags.”

When you say the refund “benefited the poor more than the rich” and that “3 or 6 hundred dollars means more to them”, I think it’s reasonable to conclude that giving $300 would ease their lives more than give $300 to Mr. Moneybags.

Apparently, I got that wrong. Apparently, you think that I should read “benefited the poor” as “lowered their taxes by a greater percentage”. All I can say is :dubious:

To say flat out that utility doesn’t matter here seems silly to me. Utility is a (rather stylized) function of consumption and consumption is related directly to after-tax income. To compare different tax systems on the basis of their effects on human welfare seems appropriate.

<<I think the conservative approach would be to question what an appropriate sharing of the collective burdens of government are. I’m not saying that’s inappropriate. I am trying to get a better fix on that POV though.>>

-------- Scylla: “more useful way of presenting it which is as a percentage of tax burden.”

Oh. And how is it, “more useful”? That was what I was trying to get a grip on, when I used a hypothetical Scylla as a foil.

Now for other points:

-------- 1. Most states have different tax systems. How the hell is any administration supposed to make a fair income tax system that plays off 50 other differing systems?

You look at averages and variances.

-------- 2. If the state income tax systems are out of whack, you don’t fix it by throwing the federal income tax system out of whack to compensate for it.

I don’t see how having a progressive income tax is throwing anything out of whack.

---------- If you try to fix a system like a truck, a pool, a garden, a house, or an economy simply by compensating for existing problems you actually damage it further.

Oh. That’s quite a generalization. Frankly, I think that analogies prove nada, but are only illustrative. But, to use your analogy, if your poolboy adds chlorine to your pool during the week, you might want to take that fact into account when adjusting the chlorine levels during the weekend.

(Of course, it’s best to measure the chlorine levels of the pool directly, and act accordingly. But those measurements will reflect poolboy’s actions, just as measures of the tax burden faced by the poor should reflect all taxes.)

Put another way, if your city proposes a higher tax on, say, water (assuming there are no water shortages in your area), I would think it valid to look at the other sorts of taxes that it is imposing. You wouldn’t want to look at the water tax (sorry, “fee”) in isolation.

---------3. “Regressive” and “Progressive” are not political statements or statements of value, quality or desirability, and they shouldn’t be used as such. It’s like saying clockwise is good and counterclockwise is bad. They’re neither.

Yeah, I’m using the terms technically. Some believe that tax progressivity (taxing a higher percentage of higher incomes) is a virtue, although at some point other public virtues are of over-riding importance. I believe that, but I understand that not all do. It’s one of those value judgements. Anyway, I mostly agree with #3, except for

-------- Regressive/progressive are not meaningful descriptors unless they are very well qualified.

Are you saying that I should never use the term, “Progressive taxation” without defining it? (I mean, sure they’re meaningful descriptors: they have specific technical definitions: they describe whether a system taxes a greater or lower share of a person’s income, as you go up the income ladder. I’m not clear what the appropriate and detailed qualification would entail.)

131

Hardly anyone is going to agree with either party on everything, or even almost everything, of importance. So I just don’t see party choice as something that can be all that rational. After all, there are liberal Republicans and conservative Democrats. This is good.

Those who think parties should be ideologically pure need to read up on Argentina. Argentine parties have been that way since early in the last century. This is illustrated by the common use of the Spanish word for “intransigent” in the names of Argentine parties. Under rule by these intransigent parties, whether of the left or right, the country has gone from being, in 1930, economically on the same level as Canada to being near third world. I’ll take our big tent parties any day over that stuff.

One good thing about America is that a majority of Americans are fairly non-judgemental concerning party affiliation. We need to see more of this inter-party tolerance on the net.

132

Your definition here is a bit confusing. I’m not sure I understand what you are even trying to say. The standard definition, as flowbark points out is that a tax is progressive if it takes a larger percentage of income as you go up the income ladder and it is regressive if it takes a small percentage.

Like flowbark, I agree with you here in a strict sense. However, one can then make arguments (i.e., present values judgements) as to why one believes taxation should be progressive or regressive…And, in particular, why we might want to make the system less or more progressive than it is today. Since I have made those arguments ad nauseum in threads on this subject before, I thought I would spare you my value judgements and stick mainly to the factual issues here.

And, by the way, the Bush Administration seems to believe, at least to some degree, that there are value judgements to be made related to progressive taxation since they are the ones who have trotted out the argument that the tax cuts are making the federal income tax a bit more progressive. (They of course do not mention that they are making the total federal tax structure, let alone the total tax burden, a fair bit more regressive in the process.)

133

…Or maybe they are just politically aware of the fact that such value judgements will be made by others. I.e., I don’t mean to imply that they are actually interested in making the tax system more progressive…But they are interested in deceptively selling their changes as such.

134

Just to be clear, I think that regressive tax systems, where the poor send a higher share of their income to the government than the rich do, are unfair and objectionable. I understand that certain Republicans disagree with me though, and I accept that.

Some pretty conservative Republicans seem agree with me, however: they say that we should maintain lower taxes on the poor, while they are less concerned about the wealthy/ middle class balance. Hall’s flat tax is progressive in a strict sense, for example. But he’s an academic.

jshore
---------“since they are the ones who have trotted out the argument that the tax cuts are making the federal income tax a bit more progressive.”

WHAT?!?!?!? Are you sure you’ve got that right? How’s that? (Is it taking people off the tax rolls or is it lowering the bottom rate or what?)

135

I think it’s important to give a factual grounding to this debate. Most states tax the wealthy at lower rates than the poor and middle class.

There are exceptions, of course. “Four states require their best-off citizens to pay as much of their incomes in taxes as middle-income families have to pay.” And, “eight states tax their wealthiest
residents at effective tax rates as high as the poorest taxpayers are required to pay.” From http://www.ctj.org/itep/whopays.htm

The trend is towards more regressivity at the state and local level. For example, the bottom 20% income group had their taxes rise by 1.2%, while the top 1% has seen it’s state and local tax burden fall during the 1989-2002 period.

(Delaware, Vermont, Montana and California have four of the least regressive tax systems, by the way.)

Anyway, let’s look at the averages:

Bottom 20% income group (less than $15,000) pays about 11.4% of its income to state and local authorities.

Top 1% (more than $304,000) pays 7.3%. But state and local taxes are deductible at the Federal level, so once that is taken into account the net burden drops to 5.2%- less than half of what the lowest quintile pays, as a share of their respective incomes.

Many Republicans find the preceding to be entirely fair, and I understand that.* I report. You decide.

  • Although actually, I believe that it is important to judge the tax system as a whole, as implied earlier.
136

Here is the press release giving the Administration’s side of the story regarding the distribution of the proposed tax plan:
http://www.ustreas.gov/press/releases/kd3740.htm

The first footnote on the PDF table briefly outlines the provisions of the package. I assume the parts that help the lower-income tax payers are the acceleration in the increase in the standard deduction and in the increase in the width of the lowest tax bracket.

Of course, since all these changes were scheduled to go into effect eventually anyway, what they are comparing is not what things would be like once they are all phased in but rather what the 2003 federal income tax burden would look like with and without the provisions of the President’s plan enacted.