Atrios comes up with a pretty good laundry list of liberal objectives if Democrats take power. I can get on board with most of this:
- Undo the bankruptcy bill enacted by this administration
- Repeal the estate tax repeal
- Increase the minimum wage and index it to the CPI
- Universal health care (obviously the devil is in the details on this one)
- Increase CAFE standards. Some other environment-related regulation
- Pro-reproductive rights, getting rid of abstinence-only education, improving education about and access to contraception including the morning after pill, and supporting choice. On the last one there’s probably some disagreement around the edges (parental notification, for example), but otherwise.
- Simplify and increase the progressivity of the tax code
- Kill faith-based funding. Certainly kill federal funding of anything that engages in religious discrimination.
- Reduce corporate giveaways
- Have Medicare run the Medicare drug plan
- Force companies to stop underfunding their pensions. Change corporate bankruptcy law to put workers and retirees at the head of the line with respect to their pensions.
- Leave the states alone on issues like medical marijuana. Generally move towards “more decriminalization” of drugs, though the details complicated there too.
- Paper ballots
- Improve access to daycare and other pro-family policies. Obiously details matter.
- Raise the cap on wages covered by FICA taxes.
- Marriage rights for all, which includes “gay marriage” and quicker transition to citizenship for the foreign spouses of citizens.
And things that ought to be obvious, but aren’t anymore:
- Torture is bad
- Imprisoning citizens without charges is bad
- Playing Calvinball with the Geneva Conventions and treaties generally is bad
- Imprisoning anyone indefinitely without charges is bad
- Stating that the president can break any law he wants any time “just because” is bad
Simplify and increase the progressivity of the tax code
While I might disagree on others on this list, progressive taxes seem an easy target for dispassionate debate. I have never understood why % alone was not enough. If you make more, you are taxed more (dollars). If it is because “rich people get loopholes”, then close the loopholes. Taxing at 50% for some and 15% for others just seems wrong.
However, for flat tax to work, some adjustments need to be made to the poverty or the level that taxes need to be paid over. I think it is something like 15k now? Figure out BY ZIPCODE how much it takes to live. Make the figure higher for couples, per child. Sure, that might take some research, but it has to be less expese than all the audits & everything now.
Then the two things for right and left to fight over is the overall % and what “things” people need (Food & a roof? Phone Service? TV? Internet?). The rest should be math.
I’m up for a progressive tax. Maybe it’s unfair, but then life is unfair. From a utilitarian perspective, I think the goal is more or less to maximize the median income of your citizens. You want the greatest good for the greatest number.
The communist approach pretty clearly didn’t work in that regard. You stifle motivation and increase wasteful bureaucracy under that model.
But with a progressive tax, you can keep incentives pretty vital while still discouraging the kinds of concentrations of wealth that distort markets and democracies and use the proceeds to make the lives of average Americans better.
And you can certainly make an argument that all of this is unfair. But if, for example, we let a guy making over $1 million per year keep most of his first million but then take a fair chunk of the second million and a great big chunk of the 10th million, I’m not going to cry him a river.
I could get on board with a flat tax, I suppose, if the initial exemption was pretty healthy and indexed to inflation (or maybe –if we wanted to get clever– indexed to something like the ratio of CEO income to average wages.)
The reason for a progressive income tax is that the marginal utility of your next dollar of income is not a constant function.
Moreover, it’s not even linear, which is why a flat tax is a horrendously bad idea.
The biggest problem for me with a flat tax is that usually it means NO TAX credit for anyone ( in theory) No home mortage tax deduction for example. The real estate related industry has coniptions even thinking about a flat tax with no mortage write-off.. So there’d be a HUGE fight by certain consituencies to keep tax write-offs,like churches,and philanthrophy in general. I dont think we want to go there.
If I recall my economics classes correctly the notion of “marginal utility” related to your next dollar of consumption, not the next dollar of income. A progressive consumption tax is at least a theoretical possibility. See:
http://www.auburn.edu/~garriro/r23seidman.htm
If “the goal is (more or less) to maximize the median income of your citizens.” than you require only two tax brackets, unless government revenue requirements are higher than the income generated.
Basically:
$0 to $ “median income before taxes + $1” 0%
Above $ “median income + $1 100%
I think I disagree with that formula in that, I think it would tend to discourage individual initiative and, therefore, the sorts of innovation that lead to greater productivity and the potential for a greater gross income for the population from which to derive the median.
In other words, you’d have everybody at the median income, but that median wouldn’t be as high as it could be. So, I think you’d want a nice balance between personal incentives and income distribution.
The basis of a progressive income tax is exactly the idea that the marginal utility of the next dollar of income varies widely with income level. The purpose of the tax is two fold. First to see that everyone pays an approximation of a fair share and second to confiscate income once it rises to the level of excessive wealth accumulation. Adam Smith explained that the rich should pay more taxes because the weight of their carriages does more damage to the public roads. What is certain from the economic history of the US is that a steeply progressive income tax levels the income gradiant and leads to a broad, stable middle class. That is a prerequisite for a democratic Republic.
I proposed the formula just as a way of hinting at other issues, which you now raise, e.g incentives, and as a way of having a little fun. Were our economy “static” the formula would produce the result off maximizing median income. The proposed rates wouldn’t place everyone at the median, just the top half. Whether the bottom half would join them there would depend upon on the expenditure side.
I thought, and still think, there is a problem with using median income in the way you are using it. For example, I could logically employ a regressive tax system to achieve the goal of raising median income through tax incentives. To use an extreme example, while all would be required to file returns, only those with income below the reported median would be taxed. Think of the incentives to earn and report every last penny.
My point is that I am hesitant to try to address all issues of distributional ethics through a graduated income tax, though I have sympathy on efficiency grounds of addressing certain basic needs by a negative income tax. In other words, not a flat tax with a healthy exemption, but a flat tax with payments to people falling below the exemption amount based on difference betweent their income and the threshold.
You engineers sure know how to live it up!
In any case, I don’t know enough economics to know if median income is really what I’m driving at. I’d like a huge pie of money to divide up — so the economy should be structured to be very productive. But, I’d like most of the wealth to reside in the middle. I’m not bothered by some ultra rich here and there or some poor here and there, but I’d like the bulk to be controlled by the middle. I also don’t want the markets or the politics to be distorted by the ultra wealthy (or the ultra poor for that matter).
I also want a pony.
And a puppy dog while we’re at it!
“and there some poor here and there…”
Here’s the deal; there is an easy test for theorizing a societal arrangement. You can have any rules, categories and classes you want but, until the deal is going down, you don’t get to pick your place. In other words, to formulate a just society you must be willing to take any position in it. Now a well regulated economy with a graduated income tax in which everyone gets enough to eat, medical care and shelter, education is free for as far as you can go and its paid for by rich people paying very high taxes but still ending up with more money than the average bear, I could live in any status in that lash up. In order to think something is wrong with that, you have to believe that the average rich person is rich because of the incredible things they do for society. I just don’t see many examples of that.
I was struck by how common sense’Atrios-Liberal Agenda’posted above reads. Could the Bush legacy be the end of Conservatism in the USA, as THEY define it?
I am very much opposed to estate taxes. Why should government get someone’s money just because they die? Why can’t a person live their life with estate planning as a part of their life, and then provide for their children, or the education of their grandchildren? The American Dream means being able to leave your children with a better life than you had, after all.
I know- here comes the Paris Hilton example, as though she is somehow representative of the average American. Let’s talk about how estate taxes affect average Americans.
Estate taxes don’t affect average Americans. With a $2 million exemption, almost nobody pays estate tax. And that’s fine. An estate of $2 million isn’t the sort of thing that creates an American aristocracy or distorts free markets or the democratic process.
Why should government get someone’s money just because they earned a paycheck? Government is part of our social compact. Without government, the lot of humans is solitary, poor, nasty, brutish, and short. So, we need a government. How much the government should do is a legitimate debate, but we have to have one, and we have to pay for it. So my question vis a vis the estate tax fairness question is how can the moral claim of an heir to the proceeds of an estate possibly rate higher than the moral claim of a worker to his paycheck? I don’t think it can, and so long as we have an income tax, I’m more than comfortable with the relative fairness of having an estate tax.
Quite a laundry list of objectives, but who’s going to pay for all this?
For companies, paying more in taxes, paying higher minimum wages, being forced not to “underfund” their pensions (whatever that means), providing “improved access” to daycare and other pro-family policies, and paying for compliance with increased environmental standards all reduces their bottom line, or worse, drives them out of business.
While at face value that may not bother you, the vast majority of American incomes come from employment at these companies, and the result will be fewer jobs and/or lower wages. So much for raising the median income.
As far as making the tax system more progressive, according to the latest IRS figures released last month the top 3% of taxpayers (those who make over $200K) paid 46% of total tax receipts. That’s actually up from 40% prior to the much derided Bush tax cut. How much more progressive do you want?
You may also be surprised to learn that the economic expansion from Bush’s tax cut increased the percentage of Americans making over $200K from 12% to 14%, and those making over $50K from 41% to 44%. So in the real world, reducing taxes seems to be moving us toward the increased median incomes you want, along with increased overall tax revenues (14% in the last year).
To Lou’s point.
As someone who voted for Bush (Or actually, I more voted against Kerry and Gore. I wish my choice wasn’t Bush, but we don’t get a voice about such matters in Indiana), I will say there are a few things on that list that I do like.
Force companies to stop underfunding their pensions. Change corporate bankruptcy law to put workers and retirees at the head of the line with respect to their pensions.
Increase the minimum wage and index it to the CPI
Universal health care (obviously the devil is in the details on this one)
Reduce corporate giveaways
And, even though I started the debate on point 7, I totally agree with “Simplify”.
As to the others on the list, I think there are ways that I would be willing to compromise on most of them. I wouldn’t sign on with exactly the plan listed, but most of them have room for some give and take.
Also, as to the last list, I agree with the words, but I probally disagree on some of what the author means. For example, we should follow the Geneva Conventions. However, we do not need to be extending those conventions to everyone. When you fight without a flag or uniform, dressing yourself like a civilian, you are not a protected member of a nation’s army. I’m not saying that gives us a blank check to do with them what we please, but we also don’t need to extend them the same repect we should give a uniformed soldier of a enemy army.
One final note. I don’t see anything about immigration on the list. Is that because the author sees no problem with what we are doing now, or because there is no clear solution in his mind?
Ok, I’m REALLY done now, but I also forgot to say I agree with:
Improve access to daycare and other pro-family policies.
True federal estate taxes affected almost nobody except for family farmers. Let us use the following typioal example with a slight twist. A farm couple owns 1000 acres ,they both die suddenly in an accident while planning their estate ,so you lose the marriage exemption, federal law allows the land to be valued at the agricultural rate of say 3500/acre, that would result in an estate that has 1.5 million taxable,a very large chunk of money to come up with, that does not even include the value of the farm’s livestock,machinery, etc. Now if this farm is located in Indiana you have also a state estate tax. Our sate will not allow the land to be valued at anything other than “best use” so depending upon the location of the property you have an estate somewhere above 3.5 million. Guess how much our state exemption is, 100,000. The key is estate taxes are just plain wrong, it does not matter whether you are a Hilton or Farmer your estate should be passed on to your heirs, not broken up and part of it given to the government. Now, the problem how many people’s estate is either 2million or in IN 100,000 not many,so that is why estate tax reform is hard to accomplish.
O.k., once again, why do you think heirs have a stronger moral claim on the estate than workers have to their paycheck?
(And, as to family farms – 1) I don’t believe it’s that big of an issue, I’d like to see statistics as to how many families have lost their farms because of an estate tax; 2) if it is that big of problem and you think family farmers ought to get special treatment, grant a narrow exemption for family farms — as I recall, an amendment proposing such an exemption was defeated when Congress passed the 10 year estate tax “repeal,” leading me to believe the plight of the family farmer was merely a pretext.)
Jason,
I would guess that immigration is not on list because immigration is not a problem. Whats a problem is border control as related to national security…, illegals passing as immigrants,and just a general not knowing what’s going on vis-a-vis the Bush administration grandstanding on HOMELAND SECURITY
Ok, point taken.
Why isn’t border control and the employment of illegals on the list?
:)
Doug,
I’m eager for Larry’s response. I’m still waiting for someone who actually pays an estate tax to tell me why we should repeal it. I only hear from Republicns on the hill crying fake tears over farmers they’ve never met or never existed and their supporters reiterating talking points.
Jason,
Border control and illegals..these are just opinions,OK?
Many issues have been smoldering,and Bush Admin has been trying to manipulate issues rather than address them,and voters are catching on to that so are now already expecting ‘double talk’. People are asking that if Homeland Security is working why is there even an illegal problem to begin with? And then what really set people off were the huge demonstrations organized by immigrant rights advocates and marchers who were waving the Mexican Flag and demanding rights. I lived many years in Chicago and there are immigrants on every block and they all have their stories,many of which I have heard.YEARS and Years to get naturalized…night school,studying English,and having to make a living all at same time,now here all these people come across the border,wanting to go the HEAD of THE LINE demanding ALL their rights NOW.I think many people are suddenly furious. And Bush is to blame because he’s seen as encouraging it by his lack of border control while he vaunts Homeland Security. Another issue of more liberal types is the general problem of deliberately depressing wages by outsourcing work to low paying countries OR by acquiescing to allowing illegals to enter country with no legal rights who will work for the same as if they were Chinese peasants.For years there have complaints from border states who are overwhelmed trying to serve legals and illegals in most cases they are never asked for their legal status. That’s the smoldering part.The Federal govt has had a blind eye and a closed purse.
By November immigration and /or border control will probably be be a major issue,but right now it’s developing too fast for politicans to know what side to come down on.WE cant alienate the Hispancs ,because they dont distinguish legal from illegal anyway (many families are made up of both),but on the other hand we cant alienate those who think Bush is selling out the country ecomically and lying about security besides.
So stay tuned. No one knows yet who will get hurt besides Bush admin,and those politicians who support his policies, who surely will.
While I don’t know any farmers, I do know personally a family who had to sell the family business because it was the only way to come up with the cash to pay the estate tax. From the sound of it, the business was far and away the largest asset, yet the estate tax created a tax liability that exceeded anything the family or the business could pay otherwise.
Two of the three children lost their jobs there when the new owners took over.
http://www.retirementliving.com/RLtaxes.html
The above link sheds some light on how Indiana compares to all other states from the point of view as a place to live in retirement,over all tax burden . Estate and retirement taxes are covered,compared to other states
Taxes should be progressive because Bill Gates should pay more for the military to protect his $20 million house than I have to pay for it to protect my $140,000 house. Same as homeowners’ insurance rates are progressive.
The “estate tax” is merely an income tax on unearned income. The heir receives income, and therefore pays an income tax on it, just like anyone else would on their income. Oh sure, his father (or grandfather, etc), earned the money. And during his life he paid taxes on that income for the benefits he received by being a citizen here (some of which likely helped him to become wealthy or didn’t hinder his ability to generate wealth). Now he is dead, and someone else is receiving a check consisting of income unearned by that person. Now it is that heir’s turn to pony up for the benefits they receive from their citizenship. The original earner’s tax bill back in the 1950’s does not pay his family’s tax bill for eternity.
I will admit that because of the federal exemption and ability to value my families property at its agricultural value I did not have to pay any federal estate tax,yet I do know farm heirs that did have to pay the tax. Now my problem is really with this state and the state estate tax. By my thinking and correct my if I am wrong, if the federal estate tax was abolished it would be hard for any state to have one. As far as a stronger moral claim to my fathers estate than any government agency that is easy,1 I never saw any gov. official visting my father while he was suffering from cancer,2 my desire to continue farming was hindered by having to write a check to the state for XX,XXX. Now on to the paycheck thing I still think everyone receives a certain amount of goods and services from the federal gov. that could not be provided by any other entity. The money has to come from someplace. I hate paying taxes as much as anyone else, but what is the alternative.