Taxation, the Economy, Equality, and Fiscal Policy

Because the tax code is "progressive" isn't that the only real way you can cut those same taxes...progressively? PR has everything to do with it.

As it stands now 48% of wage earners don't pay income taxes. Once that number hits 51% (a goal of the left, it seems) you have a voting populus that can and will tell the paying populus what to do. It's important that we don't divide the country up into the people who pay the bills and the people who tell them what to do. Everybody needs to pay their share or this democratic system we have will collapse in on itself.

I think it was Ben Franklin who noted that a society cannot survive long after it discovers that it can vote itself money from the general treasury.

That aside, did most of America really know that there were tax cuts for everybody in Bush's tax cuts? Really?

No. It was only and exclusively labeled "Bush's tax cuts for the rich."

 

You realize those people still pay taxes, right J-Rod? Income taxes are just about a third of government revenue.

 

They pay more in taxes, so they should get the bulk of the tax breaks. Those are the facts, too. that's not PR. It's juyst basic fairness. If they pay more, then they get the bigger break.

The guy making a million pays far more than someone getting minimum wage - and the minimum-wage guy probably gets a fair bit of welfare that is often paid for by the "progressive" taxes on the rich.

 

Sometimes you make perfect sense, J-Rod, but not this time.

Unlike J-Rod, at least you recognized that the Bush tax cuts were aimed squarely at the rich. That's a start. You know, my 6 year old learned to tell the difference between fact and opinion in kindergarten. He's only in first grade, but he's already a year ahead of you.

 

Well, Jabba, at least you were gentle with me.

 

I guess I'm interested to hear what the tax cut advocates see as the goal of extending the Bush tax cuts for top income earners. I'm uncertain which rationale would justify it. If you are aiming for economic stimulus, then the maximum amount should be spent rather than saved. This would suggest that tax cuts would be better directed at lower income earners. If you are aiming to affect quality of life, targeting lower income brackets would again seem warranted. This is because while there is variable quality available in goods, it's also true that most goods and services have relatively well-established price floors. Compounding this effect, the cost/quality relationship is non-linear. Thus, returning 5% of a low-income earners wages would have relatively more impact for that person than returning 5% of a high-income earner. What exactly are we trying to accomplish that would be best served by skewing tax cuts preferentially towards the rich?

 

The lower-income person buys a bunch of stuff from Wal-Mart with his 5% cut in a tax rate.

Higher-income people tend to launch things like Amazon.com, Staples, or Apple via venture capital when they get a 5% cut in a tax rate. And those tend to create jobs for people.

Now, why would some folks want to make it HARDER to launch the next Amazon, Apple, Staples, or even Facebook? Do they WANT people to be unemployed and hooked on government assistance?

 

You are forgetting, JM, that even if the money is saved and not spent, much of that saving is done through CD's or other investments in the economy. And even if it's just put into a bank that bank now has more lending capital.

The problem we face now is that the new health care law and the uncertainty in future taxation is causing the current hesitation in spending and hiring by the "rich."

What the left needs to face is even if Obama economics plan was solid it is being undermined by his health care law and taxation policy. The proof is found in our current status.

 

The "tax policy"? I'm sure the economy is being devastated by the specter of raising the top marginal rate to what it was in the socialist, economic hell that was the 1990s.

 

J-Rod, the rich are doing what the banks are doing right now: stockpiling cash and not lending it out so little capital investment is going on in the economy.

The rich can't be depended on to use their tax cuts for serious investments in the economy. The evidence has always been against trickle down economics. It's time for 80s style Republicans to update their ideology to reflect evidence-based reality.

JM, you can see the recovery in tax receipts reflects the shallowness of the economic recovery. Some corporate profits have recovered, and so the big receipt gains have come from corporate tax. Individuals and families are still in recession and so there you're not seeing the recovery in tax receipts.

 

Jabba, it's their money - not yours or Obama's - THEIRS, so they have every right to stockpile their cash if they do not feel the investiment climate is good. What part of that do you have trouble understanding?

 

To be fair, it ain't hard to reduce a deficit that dwarfs the deficits of all the previous presidential administations combined. I hated hated hated the Bush era deficits, but if we saw the current deficits reduced to those levels again I'd jump for joy.

But let's be clear, we are on our way up from the recession. I understand this. But the hiring and lending freeze is a direct result of Obama's heal care and taxation policies.

 

Good, at least you agree that trickle down economics as a justification for tax breaks for the rich is bogus.

But it's not "their money." That's the political ideology talking rather than the evidence-based reality. Hi marginal tax rates on the rich are rent for being able to conduct business in one of the most stable and lucrative consumer markets on earth. Fiscal conservatives want to conduct business in a rent-free environment. But that only leads toward less stability. Conservative ideology would turn the entire nation and society into a tragedy of the commons. As I've argued many times in the past - the smart rich money is on keeping tax revenues high enough to support stability of the business environment via a basic level of social services for the poor and lower middle class.

Why do you think the rich flock to Manhattan (half of all Americans with a net worth of $100 million or more have an apartment in Manhattan) despite some of the highest city and state taxes in the country? They pay those taxes in order to have direct access to the richest people in America in a safe environment free of torches and pitchforks. And Bloomberg spends, dare I say "liberally," on pitchfork suppression.

With the alleged huge incentive that high tax rates provide to make rich people flee, New York City should be empty of rich residents by now. Or, just maybe, JS, everything you believe about progressive marginal tax rates is wrong.

 

And yet, the only evidence for this being true is conservatives repeating it. Banks are not lending because of the tremendous uncertainty about how much bad mortgage, home equity loan and consumer credit debt, not to mention bad business loans, has yet to be written off, or have you not been paying attention to the weekly bank failure rate?

 

Banks also have no incentive to lend when they can borrow for <.25% and park in an account at the Fed making .25%. Riskless money. Its why we have $1 trillion in excess reserves in our banking system.


edit: added in excess reserves, otherwise the point didn't make sense.

 

Well, I can tell you this:
I work at Honeywell. The week before the health care bill passed (And back then it looked pretty certain that it wouldn't) Honeywell announced that they were going to lift the hiring freeze by the fourth quarter. After the bill passed we got an e-mail stating that the freeze would remain in effect and that we may even expirience a lay-off in the coming first quarter due to the bill.

Was Honeywell lying? Who knows. But I remember coming in here and telling you guys that I might lose my job (and still may) so that "everyone" can have health insurance.

And that ain't how America is supposed to be.

 

I think you have a lot of CEOs out there who are having all sorts of business problems right now in a very sluggish economy, and shareholders are breathing down their necks saying why haven't you done more and it's easy for the CEO to distract attention from his own performance and say "look, it's the uncertainty caused by healthcare reform." The reality though is that businesses have been scrambling to find answers to the daunting problems posed by their employee health benefit plans, reducing benefits, raising employee premium shares, jumping from one plan to another trying to keep employees covered, but they have not been able to keep up.

Our private sector health care has been strangling the economy, a little bit more each year, and that ain't how America is supposed to be. The healthcare reform is going to be good for businesses. It's going to stabilize some of the uncertainty around HR benefits.

 

This opinion piece from The Washington Examiner would disagree with your last post Jabba.

 

I liked this one: "Obamacare won't allow employees or most small businesses to keep the coverage they have and like." The number of employees and small businesses that "like" their benefits plans is dwindling, and more and more small business have been forced out of the health care benefits arena entirely because of ever-increasing expenses. I know families who five years ago had employee health benefits that covered their entire family see their coverage go down to a major co-pay and plan reduction for the employee, with the rest of the family forced to hunt around outside the plan for affordable coverage, also seeing huge annual increases.

This pretense that businesses were satisfied by their health coverage and now the rug is being pulled out from under them is pure fantasy, like some kind of ludicrous acid trip. I was at a meeting with health plan brokers not too long ago, and the stories they have to tell are mesmerizing.

 

J-Rod, just out of curiosity, what's the age demographic like at your job? How many people expect to be retiring in the near future? Or at least, how many do you think were intending to retire before the meltdown?

And this is why I'm asking J-Rod about the age spectrum at his work.

I work for a utility. When I first landed here (2003), I was told the age demographic was 75% Baby Boomers, 25% others (where I fit in as I'm Gen-X, even though I've never liked that term.) The writing's been on the wall for years now that all these Boomers were soon to retire, and that we'd need to replace them to stave off the 'brain drain' of knowledge & experience that was sure to occur if they weren't.

So even before the meltdown took place, it was an open secret that the Company would have the daunting task of paying the pensions (plus continued healthcare) of all these retirees AND paying the wages & benefits of current employees at the same time. Pensions + healthcare for Boomer retirees is going to cost the Company a fortune (paralleling the Federal Government's Social Security problem). Our last union contract negotiations got ugly over the details of healthcare coverage (co-pays, etc) and scheduled wage raises. We came damn close to a strike last time in 2007, a year before the meltdown. We're likely to strike for real when the contract's up next year.

Both sides are sure to use the (recovering?) economy as the primary reason for their arguments during the contract talks. But the word on the street is that my union's going to hit the wall, because Management's been using the meltdown as a primary reason for not filling jobs as retirements & resignations have occurred. We've not had any direct "layoffs", but not hiring anyone to replace a departing employee is basically a backdoor layoff just the same.

I've no doubt that Management will use the new health coverage law as an added reason to play hardball, but just who blinks first is going to be difficult to say. So I expect to hear more stories like J-Rod's over the next few years as both government and private trade unions have their contracts negotiated. But it'll be some time before we get accurate stats on all of this...


EDIT: can't somebody fix this ****ing interface so it'll STOP HAVING A SPAZTASTIC SCROLLING FIT every time I post a lengthy piece??