Tax Rebates Are Unfair to the Poor?

The BBQ Pit
41

And you think that the right is not interested in subsidies and entitlements? Now who’s asleep?

It’s about who each side is interested in subsidizing and “entitling” if you will. The left: individual human beings in need of the same things that make all our lives better: health care, education, food, housing, environmentla protections, etc. And the right? If we’re talking “select minorities”, I think the Right wins hands down. (Did you know that according to the dept of health and Human Services, nearly 37 million Americans were living in poverty in 1996? Quite a minority.) Because they want to subsidize big corporations, shareholders, the rich in all their many varieties. Because it’s important that the rich keep getting richer. After all, if they don’t, the economy will collapse, we’ll back to the dark days of the Depression, and then we’ll elect some Commie to turn us all into socialists, not to mention the fact that the earth will open up and swallow us all.

If we’re gonna subsidze something (and we’re gonna, one way or another) I’ll subsidize individual human beings who have fundamental human needs. Not people and corporations whose single need is to be even more rich and powerful.

stoid

PS: Please do not take this to mean that I am under the impression that the Democrats are saints. Campaign finance rules make that an impossibility.

42

Gee, Manhattan, do you think it makes you look smart to call me stupid?

And how in heaven’s name do you arrive at me thinking that Bush and Co. are going to do a better job of spending the money?
stoid

BTW, if it makes any difference, continuing to resort to personal attacks will ensure a one-sided conversation from this point on. If that’s what you’re after, enjoy!

43

::sigh:: You know, Bush in the White House, Republican House, that sort of thing. If they hadn’t voted to send some of the money back to me and you, well, they would have spent it. Republicans, that is. You know, the guys you hate. And they would have spent it on something stupid, like a missile shield. Do try to follow along.

And cut the crocodile tears about “personal insults.” You include a personal insult to every Republican in substantially every post you make. That includes me, and many other posters on the board. For you to get upset when someone returns in kind the crap you dish out is hypocrisy. Or (heh) stupidity.

I, on the other hand, limit the scope of my observation to you. And it’s not really an attack. I honestly believe that you are stupid. Hope that helps.

44

Follow-up to Anthracite, I should have quoted you as saying “harebrained” rather than “crackpot.” My apologies.

45

Here’s the problem:

The most effective tax policy is the one that strikes most of us as, superficially, the least fair: Provide a large cut in marginal tax rates, which benefit primarily the wealthiest. This little rebate is nothing more than cheap gimmick, because it ain’t enough for anyone to save. That, you see, is where the real multipliers exist - whether the savings go to banks, mutual funds, or (better still) risky venture capital, the dollars so invested multiply much faster than the dollar spent on immediate consumption.

The reason you want a reduction in marginal tax rates is precisely because it gives rich folks too damn much money to spend. Instead, they’ll invest.

In fact, there’s some research indicating that changes in tax policy don’t have much effect on rich folks’ spending - they spend a certain amount, and what’s left over they invest. Increase the amount available for investment, and that results in more wealth and job creation, which means that overall the entire system is better off, and indeed, tax receipts increase for governments. (This is particularly true for capital-gains taxes - raising rates results in asset fire-sales prior the rate increase, thus depressing asset prices and guaranteeing that government comes out behind.)

The fundamental fallacy behind much traditional “liberal” tax policy is that they assume (a) that tax policy doesn’t affect behavior, and (b) even if it does, everyone behaves the same. The problem is that the rich indeed are different from you or I, because their behavior has the greatest impact and because they invest rather than change spending.

Now, some wag is bound to ask if tax rates for the wealthy should be reduced to zero. No, of course not. And I’m not a flat-taxer either, I believe in graduated rates under which a majority of the citizens of this country simply don’t pay taxes at all. (In fact, I’d love a breakdown of how many people do, in fact, either pay no taxes or receive an Earned Income Tax Credit, which means they actually take more out each year than they put in.) What I do believe is that when you need a stimulus to wealth and job creation, you focus it where you’ll get the most results for everyone, even if on the face it’s counterintuitive.

Oh, and then there’s this little question of wealth. With the exception of estate and land taxes, by and large we don’t tax wealth in this country and that’s A Good Thing. You see, if we tax wealth, we force people to sell assets. That depresses asset values, which results in a downward spiral to the economy. Plus, it results in some real injustices - perhaps not for W.'s putative family-farmers, but for older people who suddenly can’t afford the property taxes on the modest home they’ve owned for 35 years.

Nope, on a superficial basis none of this is fair. But the effect of failing to view the economy dynamically results in Eurosclerosis, where the most dynamic economies (Britain, the Netherlands and Ireland) are those that have most rationalized and reduced their tax burdens. It works, and as imperfect as it is it results in the largest job creation around. And it even results in a pretty decent standard of living (ever reviewed what percent of the population has telephones, televisions and air conditioners?), even if it is highly unequal. It really doesn’t matter where the ceiling is provided that the floor is reasonably clean. Yes, there are holes by region (Appalachia, inner cities) and in such categories as health insurance (although frequently people misunderstand lack of health insurance as lack of health care, which most emphatically doesn’t follow). But the alternatives are worse.

46

Eh. I think the jury’s still out on this one. Personally, I think when the historians write about the recession that I believe we are currently in, we’ll find that it was an investment-led recession. That is to say, too many companies had access to too much cheap capital for too long. They built up productivity faster than the ability of consumers to buy the increased production, and they failed to bring unit costs down enough profitably to pass on pricing decreases sufficient to get that consumer to change his mind.

So the economy is choking right now on excess capacity and (to a lesser extent in most industries) inventory.

Add to that the layoffs that resulted from hirings that never should have occurred in the first place (also attributable to too-cheap capital, as in the internet sector or long-haul fiber, for examples), and I think you’ll have this recession in a nutshell.

47

Remind me…what is it exactly I don’t have the “guts” to apologize for?

I called the idea “harebrained”. I didn’t call the economist or yourself harebrained. No additional information has been given to me (other than a short bit by picmr) that convinces me otherwise. For your part, you did not expand upon it any further either. You also did not post the tax amount I asked for, but I think that is a moot point now.

It’s a harebrained idea if Democrats are pushing it as another “this will mainly affect the rich” scheme. $100 billion doesn’t just appear from a few rich fatcats. It comes out of the mutual funds of the working families out there. It will be a pass-through cost. I’m waiting for someone to convince me otherwise before I “apologize”.

Recapping: I didn’t call you harebrained, I didn’t even call your economist you quote harebrained. You decided to make a comment about my “guts”. I can point you to a few threads where I show how much I have in the way of “guts”. And how abjectly I can apologize if I am wrong.

You have chosen to make this personal with your “guts” comment. I think you need to think very carefully as to whether you really want to start something with me over this.

48

Oxy*“The fundamental fallacy behind much traditional “liberal” tax policy is that they assume (a) that tax policy doesn’t affect behavior, and (b) even if it does, everyone behaves the same.”*

Really? Can you please provide the name of one liberal tax policy strategist who believes that tax policy doesn’t affect behavior? Or a link to a self-styled liberal economist who argues that “everyone behaves the same.”

For about decade now, I’ve been reading a lot of left and liberal analyses of economics and tax policy. The funny thing is I’ve never come across this “traditional” view.

Most of the liberal analyses I’ve read argue that tax cuts do in fact enable those who don’t already consume as much as they possibly can to consume a bit more. Shockingly, they too have managed to glom on to your earth-shattering revelation that rich people don’t need tax cuts in order to spend; they tend to “invest” the money instead.

Although I don’t know that manhattan thinks of himself as a liberal, he’s already provided the same kind of arguments that I’ve been reading as to the inability of tax-cuts for the rich to stimulate the economy. (Another argument I’ve heard is that income tax cuts–vs. payroll tax cuts–take too long to stimulate, even if they had been targeted at the right people).

49

I want to modify that a bit for my situation over here on the libertarian side:

“It’s my money, I earned it by working my motherfucking ass off and by doing the responsible thing and saving for my future, I paid it, I do need it, give it back to me so I can spend it on things I need!”

There. I like that one better. :smiley:

50

Anthracite, You may be certain that I know you are not a shrinking violet; and I’m sure that you would make a formidable foe in an electronic catfight. I have no interest in starting one as I’m sure both of us have better things to do.

Whether you agree with him or not, the economist I posted was legit, his idea is worth considering; workable or not, the idea is neither harebrained nor tantamout to your friend, the Noah’s Ark-touting PhD. To be sure, this is the Pit. But it’s my practice, and that of the posters whom I most respect, to do justice to those who argue seriously, and who take time with their posts, by not casting slurs on the information they provide. That is all I meant. Perhaps it’s me who doesn’t know you well enough to appreciate the, um, well-intentioned piquancy of your rhetorical style. <bows>

51

Yes, but there are two parts to that. I also do admit when I am wrong, or have done wrong.

OK…that is a much better way to say you think I am screwed for thinking it is harebrained. Thank you; I can accept that. :slight_smile:

52

Another thing to think about for those of you who are maintaining that the Evil Rich shouldn’t get tax cuts. You are closer to the Evil Rich than you think. High taxes and what I consider unfair tax laws don’t just happen to people who are bringing in a million or more bucks a year; once you get into the mid to high five figure range, or your investments start to pay off, you’ll be subject to some pretty damn harsh tax laws.

I, for one, am dealing with the fact that I get to pay tax on money from stock options that never hits my check book. Yup, that’s right. I get to pay tax on money that I currently don’t, and never did, have. Yes, it’s great that my company did well and gave me options that are worth something, even in this shitty economy. But I could easily have easily gotten to a point where I owed more than I own, even if I liquidate everything. All on money that I never had a chance to spend.

I, for one, am all for the tax cut. Even though it doesn’t fix the above situation, I’ll take anything I can get.

53

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The “traditional” view appears not in the evaluation of tax policy in general - you’re right, self-styled liberals manage to persuade themselves that a laundry list of “targeted” tax cuts will cure the ills of the world. No, it appears in their analysis of cuts in marginal rates, in which they seem totally uprepared to credit any longer-term economic gains to lowering marginal rates. Nevermind that “targeted” tax cuts usually (a) either result in reams of new material in the Federal Registor, or miss their targets, (b) generally reward choices that people were going to make anyway (like a college education), and © tend to ignore market responses (like the inevitable increase in tuition, meaning that the tax cut ends up eaten by Whassmatta U. anyway). We’ll set aside (d), the fundamental intellectual dishonesty of pursuing social policy through the tax code.

Now, as to Manhattan’s point - he’s speaking of the economy right now, which frankly is the least of our worries. I suspect that he’s right - a tax cut won’t help at the moment. I remain unpersuaded that consumption-oriented tax cuts would help any more, and certainly in the long run it’s much more likely to make mischief.

We’re getting at what’s actually a deeper problem: generally, the left tends to be more concerned with what’s happening Right Now, and urges government to Do Something. We’re always in a Crisis - a Poverty Crisis, an Alar-in-the-Apples Crisis, an Childhood Violence Crisis. My experience is that often by the time governments gets around to Doing Something, the immediate need is long past. The greater problem is that almost always, Doing Something imposes horrific long-term costs, such as completely distorting the rental-property market in New York City, destroying an industry, or imposing regulations forcing teachers to spy on parents.

My response is that in the short term, we’re all fucked and the quicker we get used to it the better off we’ll be. I stand by my prescriptions for the long term, which is the only term we have even a prayer of affecting.

54

that should read, “a marginal tax cut won’t help at the moment.”

55

For the record, I make no assertion (in this thread) regarding the efficacy of targeted v. broad tax cuts.

I was simply commenting on the roots of this particular (maybe) recession.

As a provider of too much too cheap capital, I felt the need to fess up!

56

OxyMoron"[The “traditional” liberal economic view] appears in their analysis of cuts in marginal rates, in which they seem totally uprepared to credit any longer-term economic gains to lowering marginal rates.

Please define precisely what you mean by “cuts in marginal rates” so that I know how to respond.

“We’re getting at what’s actually a deeper problem: generally, the left tends to be more concerned with what’s happening Right Now, and urges government to Do Something. We’re always in a Crisis - a Poverty Crisis, an Alar-in-the-Apples Crisis, an Childhood Violence Crisis.”

Sorry, oxy but this is not the leftwing economic spectrum that I know. Most of the lefty economists I read are concerned precisely with the long-term picture. For example, Lester Thurow, who argues that the US is not investing enough in job training and R & D and will not be competitive with the Europeans in the long-term. Or Cobb (that name is from memory) who argues that GDP is not a good measure of economic prosperity because it doesn’t take factors such as sustainable development into account. Or the Economic Policy Institute which persistently argues that conservative economists don’t think enough about the trade deficit or oversupply; and that, historically, conservatives have been too concerned with lowering inflation and increasing profits and too little concerned with long-term growth of the kind that is likely to benefit most Americans in the form of good, secure and high-paying jobs. Whether one agrees with these positions or not, these are not short-term goals.

I would add that it’s a bit strange to argue that “poverty” is a “Right Now” crisis. Or childhood violence, for that matter. I’m well aware that some conservatives feel that poverty is inevitable for some people; but that’s different from saying that it’s a temporary issue that comes and goes.

Do you actually read left or liberal economists? Or do you just read strawman versions of their arguments served up by people who already agree with you? I ask this question seriously–not as a snide remark–because you seem intelligent and yet you don’t seem truly familiar with the liberal positions you are critiquing. You might actually find it interesting to read something by one of the economists I’ve mentioned. They’re smart people, and, whatever you ultimately decided about their ideas, I don’t think you’d end up rejecting them b/c on the grounds of endemic shortsightedness.

57

Cite, please.

58

I dunno, I think some “short term, oh my god we have to fix this horrible situation right now” things have come from the other side as well. I submit to you The Need to Federally Legislate Where Boy Scouts Can Meet. Or how about Mandatory Sentencing for Drug Offenders? Or By Gum, Our Moral Fiber Is Being Destroyed by Mapplethorpe And His Ilk And I’ll Be Damned If I Let Federal Money Support It!

59

A dollar twenty five??? It hasn’t been that cheap here (NH)for over a year. The local stations have it at $1.73 and the cheapest I’ve seen it is $1.68, except for a fluke this Sunday when a couple of stations had it as low as $1.57, though they’re back up to “normal” prices now. Gas prices are within 4 cents of their all-time high here, so we aren’t experiencing any significant price drops.

However, the problem with the argument about ajusting for inflation after it being cheaper 3 years ago is that it was way cheaper than normal that year. When gas was going for $.95 during the spring of 98(or was in 99? whichever), it was a big drop, the prices the three years before in those months were about $1.20 or so.

60

Can’t imagine when the last time that took place :rolleyes: