Quote:Original post by frob
Quote:Original post by Khaiy
As if that needed any confirmation. The crux of the Republican argument (this is true for all flavors of Republicans over the past 30 years) is that making the rich richer will be good for everyone, despite evidence that is generally contradictory to that assumption. |
Please be VERY careful with that argument.
Consider that two of the three richest per-capita states are Idaho and North Dakota. Why? These are dirt-poor farmers and ranchers whose farms are run as personal assets. They spend their money and mortgage all their land on seed or grain, tractors, fuel, and seasonal workers. Then they hope to recover most of it by selling their produce to the large co-ops. Generally their net income is at or below the poverty line.
On paper they are millionares or multi-millionares with land, tractors, irrigation equipment, and much more.
Yet they are dirt poor.
The bill which was (thankfully!) not passed did not take this kind of situation into account. Using gross income is a terrible mistake. |
A significant consideration to make about Idaho and North Dakota is their low population density. It's not all family farms-- there's a huge amount of factory farming, and, in the case of North Dakota, natural resource industry (particularly natural gas right now). These are run by firms who dramatically distort per capita income figures without reflecting much of anything about individuals there. Also with North Dakota, they have barely been affected by the recession due to not really taking part in the boom of the last twenty years, so their fiscal situation is looking comparatively good right now, even though they may not be a "rich" state.
That said, farming is an extremely difficult path to pursue. There are tax acknowledgements of this, but not enough to avoid the trap you reference above. In the case of the paper-millionaire farmer, a higher tax rate certainly doesn't make sense. But after business deductions (which modify the base number for taxable income, I'm told), people who invest in their own businesses like farms tend to not have as high of taxable income as they appear to on paper. But regardless of this, you are absolutely right that tax law needs to take this situation into account, and any bill which fails to do so will contain a serious flaw.
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There are many other classes of small businesses that are similar where people are "dirt poor millionaires". |
Not really. Have a look at
this, and then
this, for starters.
Some people will fall between the cracks of this, or any proposal to change the tax code in any way. But this is far from being an inherent problem that will echo thrgouh massive segments of the business population, forcing them to pay top-bracket taxes while taking home poverty-level money. This was even less a problem when Democrats offered to raise the cutoff for the top marginal rate bracket to $1 million, which Republicans voted down.
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Another thing to beware of in policy is the frequent cry of "taxing the rich". A tax on resources you already have is nearly criminal and quite likely to be unconstitutional, as opposed to a tax where money changes hands (income and sales) which is at least somewhat palatable. Taking resources from someone simply because they have it is (almost always) theft. Yet the media generally won't spend time on the details and end up creating public outcries for things that are both unconstitutional and contrary to the founding principles of the nation.
Taxes are an incredibly complex issue. |
Absolutely they are. But no one is suggesting taxing money you have. Changing the
income tax rates only affects income, not, say, savings or capital gains. If you pull $5 million a year, you would face the higher rates talked about in the bill, but that wouldn't be on anything that you held-- it would only be on the new money coming in (and even then, only in certain ways). Something like a property tax, owed and paid on land and property that someone owns, is an entirely different matter and not directly affected by income tax rates at all.
But one of the biggest issues with taxation is that it's hard to control the tax burden very well. If you're a millionaire, you have income generating options that someone who makes $30,000 annually does not. You can never lift a finger and live decadently on capital gains, for example. You may suggest that it is unfair to take more (as a percentage of total income) because they have more, but is it fair that the rich have special access to special markets while not necessarily generating any value to anyone?
While getting more money in this way than a lower income person
and paying a lower tax rate on it? And don't forget the host of tax deductions that only apply to the wealthy, or that only those who can hire a savvy accountant would ever even know about.
A Flat or Fair tax may sound fair, but it hits lower income people far harder than higher because it represents a greater share of their total income. This is especially true in America's current situation, where our debt and deficits have everything to do with poor national bookkeeping and most of the monetary benefits of those actions flowed to the very wealthy. It's not about future spending alone, it's also about the bill for spending that is already just a memory.
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Quote:| They are using deficits in an attempt to destroy federal spending on social programs, but they don't really care about worsening the crisis because they figure that once a hard fiscal choice is actually made they are confident that either, 1. It will break their way, killing social programs to protect regressive tax policy, and/or 2. they'll be dead, and have already gotten theirs. |
Welcome to politics. It is a theme that has been sung since the beginning of the country. Look back to the Civil War, when the 1860's saw us cross the billion dollar mark. Back then the number was just as unfathomable as the trillion dollar marks of today. |
It's still disingenuous, particularly when the people who increase in one area to "starve" another refuse to ever pull back the increase they started. And it still doesn't solve any problems, but rather exacerbates them, which means that we as citizens should vehemently reject it.
Quote:Quote:| But I don't think that Social Security is going to disappear. Any cuts at all will be extremely unpopular with SS recipients, and with the baby boomers poised to start collecting there will be a huge bloc of voters that will not support anyone espousing further reductions for long, regardless of other considerations. There will be too much for a politician to gain by courting them, especially as they increasingly join the AARP (a hugely influential lobby in itself), for there to be support far-reaching enough to kill SS. |
Social Security must (by necessity) be completely revised or phased out over the coming years.
No politician wants to do it. Partly this is because it is incredibly complex. Partly because it must contain bad news for a lot of people, and they don't want to have their name associated with it. |
Which is why I don't think that the program is going to be cut, in the medium- and long-terms. Too many people will be using it, a lot of them even depending on it, and they are a group that consistently turns out to vote in huge numbers in all types of elections, particularly national. They aren't going to let their representatives take SS away.
Quote:| I'm in one of the few states that have a constitutionally mandated balanced budget. By something I don't believe to be coincidence, it is also consistently ranked as a best-managed state by many organizations (such as the The Pew Charitable Trusts and others). Over the past two decades it has been interesting to compare the short-sightedness and petty bickering at the federal level against the longer-term discussion and also petty bickering at our state level. The budget is perhaps the most interesting point in the discussions. |
I also live in a state with a constitutionally mandated balanced budget. And our outgoing governer (a hardcore Neo-Con, I might add) has left us in a terrible situation. He underfunded programs for almost a decade, refused to raise taxes (although property taxes rose almost everywhere in the state to offset this), and used shifty accounting gimmicks to leave us with a $6.4 billion dollar deficit over the next biennium. A balanced budget is extremely useful, but is anything but a failsafe.
Quote:You can't blame any political party or the other for the federal government's lack of financial responsibility. There are more than two centuries of history showing that all political parties will gladly extend the public debt rather than give up their own federally-funded programs.
I heard a radio ad (on the east coast) begging people come to the federally-funded school breakfast and school dinner programs citing that they need enough people so it stays free. I was dumbfounded that first such a program would exist, "free" breakfasts and dinners for anybody who wants it, not just those with financial need; and second, that public funds would ever be considered "free". Public monies are not free, but they are treated as such by so many people. Fix that, and it would go a long way in fixing public debt.
It is painful, and that is why politicians take great lengths to avoid it. |
Agreed, both that no political party has shown any will to be fiscally responsible, and that doing so would be painful. The example you cite is a situation that should not be. But would you trade sufficient nutrition in disadvantaged children (the intended recipients of the program) to finance huge tax cuts, with the vast majority of recipients being extremely wealthy already? There's a lot of discussion to be had about this, which may be better parceled out in more posts (this one already is pretty long). But society has an interest in making social investments where individuals may not, and targeting specific investments makes more sense to me than riding an outlier or trumped-up example (ACORN?) to arrange legislation to continue increasing the already record-high income inequality in the nation.
EDIT: Fixed quote issues.
