Everyone and their dog has an opinion on the national debt, debt ceiling, and deficit issue; so I probably don’t have a lot to add. But, my own take on this is that I could live with deep cuts, even to social programs, so long as there were also significant tax increases on the very wealthy. It’s easy for me to say that, I suppose, since I’m not a beneficiary of any of the major social programs. That’s leaving aside, for the moment, that Keynesian economics suggests that cutting off spending like that in a stagnant economy is a stupid thing to do.
The reason I would insist on increased taxes for the very wealthy is because: a) it ends the deficit and starts reducing the debt that much faster; and b) it helps ensure that the national debt isn’t just being used as a pretext (which it is) to end or limit social programs that some conservative factions never liked in the first place.
Without a corresponding increase in taxes on the wealthy, I get the sense that the dynamic is to keep ratcheting down taxes; gut social security, medicaid, and medicare; not do much at all to address deficits; and generally roll back the New Deal and return us to the status quo of the Gilded Age.
How would you feel about gutting the tax code, filling all loopholes, eliminating the EIC and then lowering the corporate tax rate? We are at a point in our history where it might help us to look at decentralizing not only our revenue stream, but also our massive outlays. Efficiency is not a hallmark of gargantuan bureaucracies. I guess I don’t see the logic in Robin Hood style politics where the rich are mugged to pay the poor…especially because the poor have the numbers to vote money directly into their own pockets from the rich.
Two quick things, Andrew – That means you’re taking away my mortgage deduction, right? Thanks – screw me over.
and Two — since corporations became people and political spending became hidden again – NO– poor people really don’t have the information to become well-informed voters. In fact, most Republican-controlled states have made voting a much more difficult process in the last 5 years, so they are making even more sure that those middle class and poor people can’t take their wealth.
The rich used to at least pretend that the government served all — in order to keep the middle class thinking it would get rich so the middle class would be willing to control the poor. Now, the rich seem to be saying – eh, we own you all anyway, why pretend any more?
By the way, the FAA has already put 4000 workers on idle due to the budget. The Post Office will be laying off employees starting today. And my inside sources tell me that Social Security offices will be the next to announce layoffs. WHY the President didn’t tell us this last night is beyond me. USE YOUR WEAPONS!
I find the rhetoric completely laughable. Nothing is being gutted. It isn’t really on the table to gut anything. I agree that the spending cap battle is nothing but a pretext to cut spending on social programs- but the Republicans could have done that when Bush had the White House and the Republicans controlled the House & Senate. Instead, they expanded the programs generally, getting a lot of noise out of the little nips & tucks that pleased the religious right. Right now, this is all chest thumping of the highest order by both sides.
Also: US corporations pay the 2nd highest corp tax rate in the world, only behind Japan. It may be satisfying of some blood lust to want to go after corporations, but shouldn’t we be trying to do everything possible to attract corporations to our country, rather than giving reasons to go off shore?
Bottom line: We aren’t going to significantly cut anything. Republicans are just as deeply committed to spending as Democrats. A deal will be struck that pisses off the partisans on both sides, and as I hear tell, that’s the sign of true compromise, which is the hallmark (again as I hear tell) of intelligent governing.
Keynsian economics is bogus, as the last 3 years should have proven to someone paying attention.
I am still waiting for someone to suggest that we significantly cut back on our military bases overseas. Why are we still in Japan and Europe when WW2 ended 66 years ago?
I guess we are technically still at war with North Korea, but how about we leave that theater as well? I for one would love for South Koreans and the Chinese to have to figure out themselves what to do with North Korea.
People focus on our involvement in Iraq and Afghanistan, but we have bases all over the world. Can we afford this anymore? I don’t think that we can.
Retooling the military along Rumsfeldian lines (smaller, faster, cheaper) would be a major cost saver. I personally believe that the military is a lot like health care: you can spend a lot less as a nation and not be less well defended (or less healthy, in the later case).
I would take Obama’s class warfare rhetoric a lot more seriously if he weren’t financially supported by hedge funders, Wall Street, Goldman Sachs, and Warren Buffet. These people are going to make money off of Obama’s schemes. What is their angle? Selling life insurance to avoid taxes? Renting your jet from Netjets rather than buying it outright?
Of course, it’s entirely possible for stupid governance to piss off everyone.
But, over the past 30 years, worker productivity has increased, worker income has stagnated, the federal debt has exploded, income and wealth accumulation at the very top has increased notably. Based on those factors, it seems at least plausible that the very wealthiest have arranged to skew the system in their favor a little bit more than has been the norm.
And yet, proposals to have the system revert to prior, non-confiscatory levels are met not just with disagreement, but with howls of indignation.
Mike said:
From CNN
You said “pay”, I think you meant “should pay”. We need to close all the loopholes so cases like GE don’t happen. That makes it so that business like the one I’ve started this year pays a super-high tax rate if I go to a corporation someday, but other companies pay nothing. That is just plain unfair, and hurts competition.
—-
On a related note, I changed channels from FNC to MSNBC the other night, and in the course of 30 seconds I heard a Republican cry that if we raise taxes on the “job creators”, we’ll kill the economy. Then, after changing the channel, I heard a Democrat say that if we cut spending, we’ll kill the economy.
Considering our historical high spending and historically low taxes, I’m going to go out on a limb and say that both are wrong.
If we’d tried Keynsian economics, I’d be more inclined to agree, Buzz. Instead we had a stimulus program larded with tax cuts and props for state government that kept existing workers from being fired but hired few new ones. FDR had massive public works projects. Obama’s stimulus was not comparable. The stimulus should have been bigger, and the dollars spent should have gone directly to workers and projects. We got a band-aid when we needed a tourniquet.
No offense Doug, but you don’t know what Keynsian economics is. Keynes didn’t say that money had to be spent on public works. The mere act of spending was enough.
The idea that we didn’t spend enough is frightening. Also, much like Obama, you grossly underestimate how difficult it is to “build stuff” in America these days. The environmental reviews. The historical reviews. The public meetings. etc. etc. etc. This is why it costs literally 10 times as much to build something today than it did a mere 20 years ago, and takes 5 times as long.
Anyway, I’ve got my copy of “The General Theory…” at home somewhere. Unless Wifey threw it out, which she is apt to do with stuff that I haven’t looked at in damn near 15 years…
It was damn near unreadable anway. Dude could learn to write more clearly from the likes of Milton Friedman.
But, over the past 30 years, worker productivity has increased, worker income has stagnated, the federal debt has exploded, income and wealth accumulation at the very top has increased notably. Based on those factors, it seems at least plausible that the very wealthiest have arranged to skew the system in their favor a little bit more than has been the norm.
So it is a conspiracy?
1) productivity statistics don’t account well for outsourcing. They grossly overstate actual productivity gains for American workers. (They also grossly overstate the trade deficit).
2) Income statistics do not account for fringe benefits like employer provided health insurance. They grossly understate total compensation.
3) Income is incredibly well correlated with hours worked and educational achievement.
4) Global factors are driving the “winner takes all” aspect of increases in wealth at the very top (worldwide markets are larger than they have ever been, the opportunities for economies of scale are unprecedented). It is not clear to me that tax law changes in the US would have any effect on this. Perhaps all it would do is cause the very wealthiest to establish themselves in tax havens.
And it’s not like the wealthy don’t pay all the taxes in this country already anyway.
“The reason I would insist on increased taxes for the very wealthy is because: a) it ends the deficit”
Doug, no it certainly wouldn’t. That’s always the problem with raising taxes on the very wealthy….it doesn’t generate much revenue. The US has a sizable middle class. Unless you lower your definition of “wealthy” to start hitting the middle class you don’t raise that much revenue. That’s what Republcians always point out – and it’s true. While I don’t advocate that, an approach focused on revenue won’t raise much money if you only hit the “very wealthy.”
We decreased taxes on the very wealthy and lost a lot of revenue. It really depends how much money is being amassed at the upper levels.
We decreased taxes on the very wealthy and lost a lot of revenue.
Temporarily. But we grew out of it, which is the whole point of supply side economics.
And the converse is true: you can raise taxes and increase revenue, but the economy will contract and grow slower than it otherwise would. Because of the power of compound interest, the cost of this lost growth over time is huge.
You know what, screw ’em. Let the social programs die on the vine. Let the rich get their private jets. Because NOTHING in this world is free, and if we have learned anything about history in this world its that when a minority population holds a huge advantage in money or power over the majority of the population, the minority tends to lose their heads. Literally.
America is angry. The longer this bipartisan bullshit goes on, and the longer that REAL moderate compromises aren’t applied to our country’s problems, the closer we are brought to destruction of one form or another. If things don’t change soon, and I mean REALLY change, the U.S. of A. won’t be more than a history lesson in 100 years.
Time to face facts people. You can sit on a blog and bullshit your way around whatever facts you think you have to win a political score, or you can go and learn about the other side, grow some f’ing compassion, and try to work out a compromise. It’s completely up to you, but one way or another, America’s bills are coming due… and we’ll all have to pay.
“… and we’ll all have to pay.”
Probably, except the people who don’t pay now. I suspect they’ll continue to not pay. Progressives and mindless talking heads on TV sit around and regurgitate soundbites about how Warren Buffett pays a lower marginal tax rate than his secretary, but you fail to mention that the numbers in the “TAXES DUE” blanks of their respective 1040’s are different by a margin of four or more decimal places. Furthermore, 51% of American’s file tax returns with a big, fat zero in that blank. This debate is strictly an academic exercise until 75% or more of American taxpayers are paying something for income tax….either that or abolish the income tax altogether and pursue a more workable model.
Andrew, not only that, but bitching about Warren Buffet misses the point that his taxes are capital gains, and his secretary’s are income taxes.
Doug always makes this mistake as well. Capital gains taxes are taxes on investment. “The Rich” pay more of their taxes as capital gains. If you are going to increase taxes on “the rich”, you are going to need to increase capital gains taxes, which will discourage investment.
The ideal capital gains tax rate is zero.
Not sure why we should be more concerned about discouraging investment than we are about discouraging work.
The bit about 51% filing tax returns with “0” on the taxes due portion is misleading.
I don’t think we’re at the red-line danger level that Dave references above — but we’re headed in that general direction. What the FDR and New Deal haters tend to ignore is that FDR and the New Deal programs kept the U.S. on a more or less even keel while the rest of the world was devolving into fascism and communism.
For the record, it seems a bit disingenuous to say “we decreased taxes on the very wealthy.” We decreased taxes on EVERYONE, including the “very wealthy.”
That being said, if we want to raise taxes on those making over $500k or some other similarly large number, I am not going to argue too hard against it. But at the time of the Bush tax cuts, people making as little as $150k were in the top tax bracket. That seems too low to me.
That’s true Paul. But, I have to say, I didn’t really notice a difference between taxes I was paying prior to Bush and after. So, I’m willing to give up mine if it means returning to some semblance of fiscal solvency. I thought Obama and the Democrats made a mistake caving on the Bush tax cut extensions. Sure, they wanted to keep the cuts for lower and middle class income people; but, in the big scheme of things, they should have let the whole package revert. After all, the package was sold under the premise that the government was taking in more than it needed and we really had to worry about paying off the debt too fast. Those stated premises were obviously no longer operative (if they ever were.)
And, I’m also willing to peg some reasonably high level of income for upper tax bracket treatment. Anything you could name without blushing would probably work — same goes for estate tax exemptions — but, politically, that never happens. The rhetoric against tax increases on the “rich” usually revolves around those who are prosperous, but are generally being seen to earn their money. I don’t see those people as the problem. The drain on our society at the upper end comes from, to borrow a phrase from Matt Taibbi, the sort of super wealthy people and entities that have positioned themselves as “great vampire squids wrapped around the face of humanity, relentlessly jamming their blood funnel into anything that smells like money.”
That’s hyperbole, obviously, but with enough money, you can give yourself the leverage to suck out wealth you had no hand in creating.
Doug: BTW, I read that article by Marcus, and don’t believe it is accurate. You would think SOMEONE in the national press would have made the same point if it was true. Let’s look at the statistics and numbers:
(1) Even according to Marcus, 24% of tax returns had ZERO taxable income. This means some of these people actually not only paid ZERO in income taxes, but they actually received money from the federal govt. as some credits are actually “refundable.”
(2) Thelowest tax bracket is only 10% for all filing statuses, which essentially means a taxpayer’s first $10,000 of taxable income would only result in $1,000 in income taxes.
(3) The “taxable income” figure does not include various credits, such as
(a) The popular (and REFUNDABLE) “Child Tax Credit” ($1,000 of tax credit, eliminating the tax burden from (2).
(b) Education credits
(c) Credits for the elderly and disabled.
(d) Credit for child and dependent care expenses.
The credits in (3) affect quite a large number of people. Based upon that, I am not sure that Morton’s “correction” is correct.
The drain on our society at the upper end comes from, to borrow a phrase from Matt Taibbi, the sort of super wealthy people and entities that have positioned themselves as “great vampire squids wrapped around the face of humanity, relentlessly jamming their blood funnel into anything that smells like money.”
That’s some caricature he’s got there. Strains of antisemitism.
but with enough money, you can give yourself the leverage to suck out wealth you had no hand in creating.
How so, exactly?
Even if that’s the case, there is the bigger question of why the fetish over the federal income tax? It seems specifically designed for the political goal of insinuating that poor people are freeloaders. But, if you look at the percentage of overall income going to taxes of one kind or another, that case becomes much more difficult to make.
Doug, if you didn’t notice the Bush tax cuts at the time, it was because you didn’t have kids.
I had one kid at the time, and it was quite noticeable. Tax credits will do that to you, especially refundable ones.
I remember at the time (’01 through ’04) that the only things keeping me going financially were the tax cuts and serially refinancing my mortgage.
But, if you look at the percentage of overall income going to taxes of one kind or another, that case becomes much more difficult to make.
Bull. What other taxes do people pay?
Social Security and Medicare? Those aren’t taxes, they’re payments towards a pension. What you pay in gets credited towards what you get from the system (well, Social Security, at least, which is why it is capped).
Various state taxes? That is all well and good, but what does that have to do with the burden of SPENDING that is borne by the federal government, much of which is spent on the poor?
Following up on my “Bull” comment:
“IRS data for 2008, for example, show that households in the top 10% of earners (above about $114,000) paid 19% of their income to the feds. Those in the top 1% (above $380,000) paid 23.3%. The top 0.1% of earners, with incomes of $2 million or more, end up paying a slightly lower tax of 22.7%, because they get more of their income from investments (more about this below).
So what about the rest of us? According to IRS data, a median-income household ($35,000) in 2008 paid about 4% of its income in federal income tax.
Mr. Buffett may have been referring to all federal taxes, not just income taxes, when he said the rich pay less than others. His secretary and most workers in America do pay a lot in Social Security and Medicare payroll taxes, but even accounting for them the federal system is highly progressive.
According to the Congressional Budget Office (CBO), middle-class families in 2007 (earning between $34,000 and $50,000) paid an effective 14.3% of their income in all federal taxes. The top 5% of income earners paid 27.9% and the top 1% paid 29.5%. And what about the highest earners? Americans with annual incomes above $2 million paid an average 32% of their income in federal taxes in 2005 (the most recent year for which data are available). “
buzz: please do not quote sources without citing them. this is very bad practice. i shouldn’t have to google your source in order to demonstrate why your argument is wrong.
anyway, here is the paragraph that immediately preceded your quote:
“I don’t know the details of Warren Buffet’s personal taxes, and he hasn’t made them public. But the IRS does provide reliable data oneffective tax rates—the overall share of their income that various groups pay in federal income taxes (not including state or local taxes) after accounting for all deductions and exemptions. These are different than marginal tax rates, which are paid on the next dollar of income and now peak at 35% for individuals.”
the data you cited refers to *effective income tax rate*. this is completely irrelevant to doug’s argument, which is about the *total percentage of income paid in taxes overall*. (the poor pay a much greater percentage of their income in sales tax, for example.)
stAllio: Your comment makes little sense. Yes, the poor pay more in STATE sales taxes (in states that actually have sales taxes and don’t exempt food from it). However, we are talking about FEDERAL income taxes. If a state wishes to tax the poor heavily, that is something federal govt. should not be responsible for, nor should they subsidize it.
paul c: that’s a fair point; sales tax was a bad example. but it doesn’t affect the thrust of my argument.
I don’t think that it does. If you think the poor pay more of their income in total taxes, I’d like to see that data. And don’t include all the voluntary taxes that the poor pay: cigarette taxes, alcohol taxes, lottery tickets, gambling, fireworks taxes, etc. etc. etc.
Yes, fireworks taxes. Did you know that there is an extra 5% sales tax on fireworks in Indiana? It does directly to fire departments. How progressive!
If you make an analogy between the debt and the deficit, and a household with a large mortgage balance that has constantly increasing credit card balances because household spending is almost always greater than household income – is that too simplistic?
Or are the situations really analogous – and we just can’t get it together to stop spending so much and to start paying down debt? That politicians like buying support and power with our money and our descendants’ money to much to give it up without a destructive conflict?
Our political class has been digging this hole for generations – and I think the choices are between doing very painful things to start filling in the hole, or waiting for it to go smash and seeing what we can build from the rubble – some of which won’t be metaphorical, at that point.
I’m trying not to sound too tin-foil hat-ish, here – but I can believe in some scenarios that would have been unbelievable to me five years ago, involving civil unrest and rebellion.
[The shiny side of the tin-foil goes out, right?]
That’s part of the analogy, I guess. But, another part is that finances had stabilized more or less when Mom decided to work fewer hours so she could find herself or work a job that was more satisfying. Now she’s figuring to default on the mortgage because she’s upset about Dad spending too much money on beer.
doug: it’s not just that mom is working fewer hours than she used to; she could easily start working more hours again but refuses to even consider it.
I’m not clear on where Doug went with the analogy – I think he’s conflating taxing and earning, or maybe he just ran the analogy into a ditch – and is now drinking a slurpee, watching you try to push it…
The government/family analogy isn’t a great one; I’ll concede that – but it’s so popular and it leads to the “families have to tighten their belts during tough times, so does government” fallacy. Which, if you believe Keynes, will actually exacerbate the hard times.
But, if government is a family, then taxes are your income — voluntarily giving up income from tax revenues is equivalent to abandoning a lucrative, if spiritually unfulfilling, job.
You are conflating taxation with earning – because taking money from people backed up by the threat of force is exactly like being compensated for productive labor? Really?
So, I should go armed to my next salary discussion?
Snark aside, the original analogy addresses only debt and spending – it diverges when it comes to income – either somebody needs to address that divergence, or both of us need a Slurpee.
People make – and governments take. Taxes are NOT the earned income of the government.
parker, you introduced an analogy that you admitted was simplistic, so you don’t get to cry foul when someone else extends it in a similarly simple way.
you brought up the tired analogy between government deficits and a household budget. in that analogy, there are two ways for a household to balance its budget: decreasing spending or increasing revenue. (in my house, if i need more money then i try to work a few more hours.)
likewise, the government also has both tools at its disposal. democrats initially wanted a mixture of both but republicans adamantly refused to even consider increasing revenue. maybe you agree with them; that’s fine. i don’t. but that’s as far as the analogy goes.
If you taxed Gates and Buffett out of existence you would only gather approximately $100B. Yeah like that would go a long way to solve the debt problem.
Get over it you Lefties…….the wealthy folks are not the problem. You are. You expect the government to provide cradle to grave protection.
“I’ve never seen a poor man write a payroll check.”
Following up on what David said, the top 0.01% of income earning households had an average of $27 million dollars of income in 2008, and there were 15,000 of them. That is only $400 billion in total income for the entire group.
$400 billion is great and all, but it is an order of magnitude less than what we need to close the deficit, much less solve all our fiscal problems.
This is why Obama talks about income thresholds of $250,000, or $200,000. You need to get a lot lower than the top 0.01% to get enough households to actually generate the revenue needed to close the deficit.
stAllio! –
Well, actually I DO get to cry foul.
I also get to gnash my teeth and rend my garb, if it pleases me – Doug allows great freedom here, from what I’ve seen.
I don’t mind my simplistic metaphor being extended simplistically – but I do cry my rage to the very heavens themselves at it being extended inconsistently.
I may also weep and wail, if there’s time.
You need a Slurpee and some tinfoil, man – trust me on this.
You also need a metaphor extension that does not equate taxation to productive labor – but since your belief system relies on this pernicious conflation, I don’t see where you’ll get one.
I’m going off to kick furniture, now…
sorry parker, i should’ve said “if you want others to believe you’re arguing in good faith” then you can’t blow up your own analogy because someone else pointed out its hidden assumptions. (after all, comparing taxes to earned income is fundamental to the house:government analogy; otherwise the household is receiving no income, which is clearly not analogous to the federal government.)
i had been willing to give you the benefit of the doubt that you were just getting hung up on an irrelevant detail, but now i’ll assume you’re deliberately trying to derail the conversation.
have a good time wailing and gnashing your teeth!
Nope, you’re not willing to give me the benefit of the doubt.
The analogy can’t be extended beyond the debt aspects because taxation and earned income are not analogous.
But thanks for playing – here’s some tinfoil!
[And remember, shiny side out…]