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ETpro's avatar

Which hurts more in a recession, cutting spending or raising taxes?

Asked by ETpro (34466points) July 11th, 2011

Let’s say we need to cut the deficit by $1 trillion a year. In the current economy, which would hurt more? Cutting various spending programs by $1 trillion or raising $1 trillion in additional revenues by closing loopholes that let big corporations and wealthy taxpayers get by with little or no tax burden?

Whichever you think is the better strategy, please explain why that would be the preferred way to cut the deficit during a time of weak job growth.

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122 Answers

Cruiser's avatar

Raising taxes. Raising taxes becomes this major pariah just from the sound of the word taxes but the reality is people are plain tapped out. The level of total taxes paid by every citizen is huge and many people are at the breaking point of simply trying to afford the roof over their head and putting food on the table. These same people have cut spending in their households to the point of what is the point of working so hard??

Everybody can and has cut back in what they do and how they do it so why not our Government? Why is this such a difficult concept?

YARNLADY's avatar

Cutting spending hurts the poor more, because they are the ones who receive the most benefits. Raising taxes hurts the rich more.

JLeslie's avatar

All good. We should do everything. Suck it up and get us back on track. During recession we have had very little inflation, so the people with jobs are not hurting so bad, unless they made some bad financial decisions, which wouldn’t matter if it was a recession or not. The people without jobs are not paying income tax.

When you say spending programs I am not sure exavtly what you are referring too. i would be curious to know how much cancer research adds up to, and other things that government funds before looking to kill Medicare.

lucillelucillelucille's avatar

Cut spending.
For every dollar the government spends,that is a dollar that would have been engaged in an economic free-market way.
Those dollars employ people.As a result those dollars are spent to improve their standard of living and are invested in order to make a larger economy.As a result of a larger economy ,the government gets a larger tax revenue.Free market.Not command and control.
There is no lack of taxes that a government can conceive of,but there is a lack of fiscal control that a government can’t conceive of.

ETpro's avatar

@Cruiser If we raised taxes on the middle class, I would agree that hurts as much as cutting spending. Not more, but as much. But that’s not what the question is about. The question is about taxes on the wealthiest 1% of Americans. These are not people who are suffering horribly under the current tax burden. The wealthiest 1% of the US now owns 40% of all the wealth in the nation. And you are telling me they can’t sacrifice anything. Instead we should cut $1 trillion in spending, which means the government buys $1 trillion less, and the businesses they would have bought it from lose $1 trilliion in busieess, so the layb off millions more people. Way to go. You;ve bought what the billionaires have been paying the think tanks to preach. Nad BTW, we have the second lowest top marginal tax rate in the developed world plus tons of loopholes that make that rate meaningless. We are paying the lowest amount as a percent of GDP that we have paid in 60 years. Our top marginal rate is half of what it was in the 1940s through 1970s ehen we enjoyed the post-war boom. And we pay the lowest percent of our GDP n total taxes of all the major developed nations on Earth. So taxced to death we are not. Debted to death we are heading toward.

@YARNLADY Spending cuts hut whoever you cut. We could lay off all fderal workers, which would hurt their families and all the businesses they shop with. We could cancel road building and repairs to infrastructure, which would devastate the construction industry already reeling because new home and business construction is dead in the water. We could cut defense and have GE, Martin Marietta, Halliburton and all laying off millions, who then would default on their home loans and cut way back on their spending producing another wave of business layoffs,

@JLeslie I think you’re spot on. There are some areas where spending can be cut and not hurt the econmy. Cut those areas. But the bulk of the fix is in plugging loopholes and bringing in more revenue.

@lucillelucillelucille When consumers aren’t spending, and therefore businesses aren’;t s[pending, cutting a dollar in federal spending pulls a dollar out of the economy and produces more shrinkage in business, thus more layoffs, thus more shrinkage. It’s a vicious cycle. You launch a dwindling spiral when you cut spending by the one entity still able to spend.

YARNLADY's avatar

To solve the situation we are now:

l. Stop all waste, such as the ½ billion dollar lease on a totally empty building. This is not an isolated error. A building in San Diego sat empty for three years before the owner decided to ask the State what was going on. It turns out the person who signed the lease papers was let go, and no one even knew about the automatic payments every month.

2. Collect all outstanding taxes due. I saw a list of wealthy Californians who have not paid their taxes for years, and recently read the same thing happens on a Federal level.

lucillelucillelucille's avatar

@ETpro-You conveniently forget that government produces no wealth.
It must be taken out of private hands,who would gladly invest it more wisely for themselves.
What is the deficit right now,1.5 trillion,2 trillion??? Don’t you think the economy could use a 2 trillion dollar shot in the arm?? People don’t spend the 2 trillion,because the government confiscated the 2 trillion. Govt is also printing money that they cannot take from the private citizen.It’s net affect being, that which the citizen already owns,is now worth less because of the inflation factor of de-valuing the currency in such a way.
If they can’t take it,they print it.It’s a hidden tax.Essentially,you are left with less wealth.

JLeslie's avatar

@ETpro I feel like there must be all sorts of waste and unnecessary spending, and we are letting the media and the politicians dictate the 3 or 4 things on the table to cut. We, the American people, are limited through our own fault, in being not very knowledgeable about everything the budget encompasses is my guess. My thought is some things can be put on hold while we get out of the mess, but not things like social security. And, also, I am tired of people throwing away idea because it is only $20 billion. Everything counts, every penny, it all adds up.

ETpro's avatar

@YARNLADY I completely agree with both of thos. I don’t think that totals a trillion dollars a year, but it’s a good start and a no brainer to do.

@lucillelucillelucille Where did I say that government is the productive arm of society? I don’t recall that. I thinik you’;re battling your own straw-man there. Government definitely does have a role to play in how productive a society si, though. Look at Somalia. They have no evil gubment to ruin everything. They pay zero taxes. Is Somalia your idea of a paradise on Earth? Can you point to any failed state that is? I’m not a lover of taxes. If you can show me how we could prosper and grow by eliminating government and taxes, I’d be all ears. I have just never seen an example of any place where that worked.

There are some things that government does that really don make sense to privatize. One obvious one at local government level is fire protection. I live in Boston, a big city with wall to wall buildings covering many square miles. We could eliminate our fire department and leave fire protection up to each individual building owner. Some owners would do the responsible thing, install alarm systems and sprinklers, and contract with a nearby private contractor providing fire fighting services. But some would just pocket the money and hope they didn’t have a fire. THe problem is, if they dud have a fire, all the attached buildings would burn down with theirs. Whole blocks would burn all too often. Firefighting is something better done by government, so it’; the same everywhere. Same goes for clean air and clean water regulations, controling businesses so they don’t become monopolies, or deliberately damage their customers.

Now it’s true that the mnoney government spends generally comes from taxes. But the government is uniquely able to spend by generating money as well. And in times of a dwindling spiral recession heading toward depression, or in times of war or national emergency, that is exactly what the government should do. American businesses are sitting of $2 trillion in cash and will not spend it because consumer demand isn’t there. Consumers god clipped in the collapse of the housing bubble. THey can’t spend because they don’t have the money. So the thing to do in that situation is to deficit spend to jump start things and then to raise revenues from the corporations and wealthy, whi are sitting on boatloads of cash they won’t spend in bad economic times.

Cutting government spending by $2 trillion right now would NOT give the economy a shot in the arm. It would shoot it right between the eyes. Businesses that sell to the government would see sdales drop by $2 trillion. That would lead to million and millions of layoffs. That would lead to a new round of foreclosures, and bank failures, and businesses closing, which would lead to more layoffs. The would lead to a second great depression.

@JLeslie There is waste in government spending. For the last 50 years, politicians have run on cutting taxes and doing more at the same time by eliminating waste and fraud. How’s that working for us? It’s led to a national debt of $14,3 trillion dollars. We need to close a deficit gap of $1.6 trillion. You could sshut down the entire US government, every department except defense and entitlements, and we would still be running a deficit. So you aren not going to increase efficiency enough to balance the budget. Not to say we should ignore waste. We should eliminate any waste and fraud we can find. But that isn’t going to get us where we need to go. We have to massively cut social security, medicare and defense; or we have to bring the revenues back up to the point where we’re paying for them.

jerv's avatar

I think it largely depends on how either are done. As is often the case, the Devil is in the details.

Raising taxes on people earning under $100K/yr would hurt quite a bit unless that was countered by things like reduced healthcare costs, lower gas prices, etcetera, but each of those things would likely require some form of government subsidy and thereby increase spending. Bad idea.

Making taxes progressive and charging the top earners who earn more than ten times where the tax table maxes out an effective tax rate comparable to what a middle-class person (like the owner of a moderately successful small business) earns would not hurt nearly as bad, and may actually help the other 95% of taxpayers. Some my argue that those people need to keep as much money as possible so as to invest it and all, but is that argument was anything other than utter horseshit then our unemployment rate would have dropped considerably more than it has. Instead, all that is happening is that CEOs report record incomes, their companies post record profits, and unemployment continues while those of us who do have jobs see our real wages stagnant or declining. So not raising taxes hurts, as does allowing multi-billion-dollar companies to pay nothing and pass their burden onto mom-and-pop small businesses.

However, if we raised taxes and them coupled it with healthier incentives for the number of jobs they create that pay a living wage (none of this “15 hours a week at minimum wage” crap) then we might be able to kill two birds with one stone. I mean, employers may wind up using that “loophole” and the losses in revenue are at least somewhat offset by the fact that more people are earning enough to have to pay taxes.

Cutting spending on ineffective and/or corrupt and/or redundant agencies will help. How much money do we pay the TSA for the delusion of safety and the “pleasure” of being mistreated? I think that the value we get for those dollars is low enough that they can get the axe without any real downside. However, cutting unemployment and similar programs will lead to a humanitarian crisis, possibly leaving us only a small step above many Third World nations. Don’t get me wrong; there is waste and abuse there too, but those programs are also the only thing keeping millions of Americans (including children) indoors and eating.

So, this question is rather vague, thus the only real answer is “It depends.”.

Ron_C's avatar

Cutting spending is the most harmful thing that you can do during a depression. These are the same arguments that Republicans and Democrats had during the great depression. Roosevelt was just getting out of the depression and he buckled to the republicans in 1937 which caused the country to slide back into depression that only ended when spending increased at the start of WW2.

The republicans are remarkable in that they never learn; they refuse to learn. The arguments they use now didn’t work in ‘37 and they won’t work in 2011. I am pretty sure that is the intention. This is all about protecting their donors and the hell with their constituents.

Like Thom Hartman said “the Republicans ran up the debt and don’t want other people to pay it back” .

I am thoroughly disgusted with the conservatives. They have become more of a religion than a political party. For them, their one true god is unrestrained capitalism, anyone that disagrees must be a traitor to the country. In fact it is the tea party and neocons that are doing more damage to this country (along with the majority of the supreme court) than any enemy or attack we have ever seen.

The British burning the White House and the 9–11 attacks are nothing compared to what the ultra-conservative corporatist are doing. If they win, we all lose.

CaptainHarley's avatar

Government is not the solution. Government is the PROBLEM! Government cannot, by definition produce wealth, only private entreprise can do that. No government generated all the thousands of consumer goods now at the fingertips of most of the world’s population. No government created the amazingly wide variety of tecnological wonders we now enjoy. The only thing government can do is take from those who create wealth and give to those who do not, via taxes and inflation.

josie's avatar

Restating @lucillelucillelucille
Government creates no wealth. They merely confiscate money and spend it on nothing in particular in order to buy votes.
Wealth is the promise of further economic development.
Money is simply a moment in time.
What is more, the government devalues money by printing it as needed.
Raising taxes diminishes wealth, the wellspring of economic growth.
Cutting (government) spending compels people to become industrious, thus increasing wealth.
Having said it, many people are dependent on the coercive power of the political state to take money from the producers of wealth. It is more palatable than appealing to the church or other charity organizations. Plus you don’t have to say thank you.
So the argument will always end in a stalemate. The people who benefit from State enforced charity, and the people who resent being worker bees.
Good luck on this one. I’ve been in this thread before.

Ron_C's avatar

I agree, @CaptainHarley , that government doesn’t produce but it can stimulate the economy. What we have right now is a result of 8 years of laissez-faire capitalism and unprecedented greed. The government’s job is to regulate capitalism before it over-runs the market place. The early U.S. governments understood this and put in place law to regulate commerce, limit corporate power, and allow for maximum participation of farmers and working people in commerce, industry, and government. That is everything today’s radical conservatives are against. The recession is a direct result of those policies. The Republican party is now so radical that Reagen, Nixon, and Goldwater couldn’t qualify to join. Hitler, Goring, and Ayn Rand would fit right in.

JLeslie's avatar

@ETpro I agree, I was the one who said do everything, but I don’t want to get rid of Social security or medicare. I want to get rid of EIC. I want to raise the amount people pay into social security, meaning those that top out each year, make them pay some more in. I want to get so eone to come down hard on doctors who abuse medicare, or restructure medicare somehow.

ETpro's avatar

@jerv Well said. The Devil is indeed in the details. In the question details, I limited all tax increases to the top 1%. That is individuals who earn over %500,000 per year, and account for 24% of all income earned in the US. They pay an effective tax rate considerably lower than the average factory worker or secretary, because all the tax loopholes have been designed for them. Income inequality has grown massively in the US over the last 4o years. And we have the GOP insisting that those who have don so well cannot pay a penny more, but we can slash funds for Social Security, Medicare, Medicaid and Pell Grants to balance the budget. And unless they get their way, they will let the government go into default, and the interest rate on all borrowing skyrocket; which will bring us back into full-blown recession if not depression.

@Ron_C You are absolutely right about the depression. And BTW, we raised taxes 7 times on the way out of the deporession. The one time the GDP and employment curves turned around was in 1937, in the recession within the depression, when GOP ideologues got their way. But learn from the failure. Never. Just blame it on others and not your flawed policy. It’s the ideologue way.

@josie I already addressed @lucillelucillelucille straw man. But let’
s dispense with him again since you brought it up. The Intercontinental Railway was a public/private initiative. Without government involvement, it would have been many decades before it would have gotten built if at all. The Interstate Highway system was started by Eisenhower. How far would the US economy have come if we waited for private contractors to build a nationwide network of toll roads. What sort of air traffic control system and airport system would we have if it had been left entirely to private industry? What has come from NASA, aside form great pictures of men on the mooon and spacewalks? I’ll tell you, in case you don’t knwo. The computer revolution came from our space program. Cell phone technology. Miniaturization of electronics and everything it has brough us. The world’s leading military technology. Sure thesse things would have eventually come about through privately financed R&D, but perhaps 100 years from now. We do big things in America, and we do so because on big things like the moon shot, we work together. When would man have gotten to the moon if we waited for some entreprenuer to invest the hundreds of billions it took?

And the spending governments do to do big things like the Interstate Highway System and the NASA moon landings—that spending goes to companies all over the USA that provide millions of jobs. If the GOP forces a dafault on the US debt on Aug 2, the economy will lose 10% of the GDP in the first month. Would you call a loss like that a return to recession, or prosperity in disguise?

I asked @lucillelucillelucille for a Somalia like country, with no evil wasteful gubment spending all that money wastefully, and a booming economy. She hasn’t come up with an example. I’ll ask you as well. You say government is worthless. Where’s your example of a nation that flourishes without one?

@JLeslie The bulk of entitlement spending is in Social Security, Medicare and Medicaid. Killing the Earned Income Credit would hurt those least able to afford a hit. It currently phases in and then back out. The commonly touted welfare queen driving her Cadillac down to pick up her welfare check is largely a right-wing fantasy to make them fell more ustified about demanding more for themselves evn if that means some poor kids somewhere go without shoes or adequate food. We could certainly let Medicare bargain for the price of prescription drugs just as all the big insurance companies do. The GOP won’t allow it, because they care more about preserving their funding from big Pharma than saving money.

TheIntern55's avatar

Cutting spending could be good BUT if the government moves funds from ridiculous foreign things back to help stimulate the economy, we would be better.

Someone mentioned Roosevelt. His idea was the most genieus plan ever. We were magically lifted out of the ruins of the economy and were fine financially for a few decades.

While that was possible back then as is, things are different now. We are in severe debt. More than half of the debts owed by countries in the UN belong to the U.S. So many things have happened in the last 50 years that the U.S needs to pay for, we could keep spending without repaying debts no matter ow long it takes. Germany just finished paying off their debts from WWI last year. They have the strongest economy in Europe though.
Not sure if that answers you question.

lucillelucillelucille's avatar

@ETpro The example would be the USA before a regressive income tax was imposed on it’s citizens and their productivity. And govt works perfectly well when it sticks to it’s three basic reasons for existing which are: Police/courts, Legislative and Military, anything else is social engineering.
Gov’t generates nothing with regards to wealth so drop that one right now. The only thing a govt, spending like the one we have right now, can do is generate debt and misery for it’s citizens. This same govt is supposed to be providing an environment where free enterprise will flourish not penalize/imprison it’s citizens who don’t want Obamacare. If govt hadn’t artificially imposed price and wage controls after WWII and stayed out of the free market we wouldn’t skyrocketing medical costs right now. Employers couldn’t offer competitive wages to prospective employees because of wage controls so employers began to offer Medical Insurance as an incentive. Price controls kept fees and services artificially low and fifteen or so years later when Medicare became law with Johnson’s “great society push” the costs skyrocketed even further.
We are living this legacy to this day with further govt intrusion into free markets. The Fair Housing Act of 1990 is a prime example of the destructive power govt can wield with social engineering in the free markets. Artificial standards imposed on lenders along with govt leviathans Fannie and Freddi securing unaccountable unwise loans at still inestimable Billions in losses laid on the necks of US citizens.
No, govt should never involve it’s self in free markets like the US govt has and choose sides on the economic playing field, that is the ultimate monopoly.
Govt is best which governs least and a wise man once said: “A wise and frugal government, which shall leave men free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned – this is the sum of good government.”
Thomas Jefferson

Cruiser's avatar

@ETpro If your question had actually mentioned the top 1% of the wealthiest Americans my answer would have been different! Maybe next time! ;)

Qingu's avatar

The question is too vague. Cutting certain kinds of spending will hurt a lot more than others. Raising certain people’s taxes will hurt a lot more than raising others’.

For example, cutting spending on unemployment insurance and medicaid during a recession will fuck over a lot of people’s lives. Cutting spending on pointless defense department expenses will probably be of limited concern though presumably some of the corps working on the F-22’s will take a hit.

Raising taxes on poor people during a recession will deprive them of income they would have spent on necessities, and that money will no longer be pumped into the economy. So, yes, raising taxes on poor people will double-whammy the economy. Raising taxes on the rich will deprive them of income they likely would have saved, not spent on necessities. It won’t hurt them and it won’t appreciably hurt the economy.

Qingu's avatar

@lucillelucillelucille, actually, the government did not work well before social programs which is why widespread starvation, bankruns, and nigh-economic collapse were common in this country before the New Deal.

You are idealizing a past “pure” America that is a figment of your imagination, and if you knew a thing about economics or American history beyond right-wing talking points you would be embarrassed of the kind of statements you’re making.

Cruiser's avatar

@lucillelucillelucille The Government produces enormous amounts of wealth in the private sector. “K” street, Big Pharma, Municipal construction projects and Pork projects who are the direct beneficiaries of our tax dollars keep the political machine in high gear no matter what side of the isle you sit on. I do believe you said it best…“For every dollar the government spends,that is a dollar that would have been engaged in an economic free-market way.” Does it really matter who spends that dollar as long as someone gets to put it in their wallet and spend it again?

HS why not have the biggest Government we can muster and let them spend like mad so money is flowing everywhere! Socialistic Nirvana!

ETpro's avatar

@TheIntern55 I fully agree that if we did some nation building to our own infrastructure here, that would do a lot more for American jobs than shipping crates of money off to the Pakistanis for their nation building.

I disagree that we are in a debt crisis, though. At the end of WWII, the national debt hit 120% of GDP. Today, it’s around 90%. The yeild on treasury bonds is 2.9%. That tells me somebody thinks the US government is actually in pretty good financial shape. Our real crisis right now is a jobs crisis, not a debt crisis. Most Americans can’t borrow money at 2.9% interest, even on a secured purchase such as a home. But most Americans when they buy their first home put themselves far deeper in dent thant 90% of their annual income. 2 to 3 times their annual income isn’t unusual at all. We are in a crisis of debt in public preception. It’s been designed and delivered to allow management by criisi in order to kill social programs so the GOP can make the growing wealth disparity even greater. But we aren’t in a real debt crisis like Greece. We’re just about to get ourselves into on by deliberately defaulting on our debt obligations to investors.

@lucillelucillelucille I think you mean before a Progressive income tax was imposed. We have not yet had a regressive tax, which is a flat tax, sales tax, or value added tax as the major revenue generator. Now, the current income tax system was first imposed on the US in 1862. So your model of a bustling modern America is pre Civil War? No, how about a nation state dealing with today’s world, not something from ancient history. We had a previous tax to finance the War of 1812, but Congress rescinded it shortly after the war.

Since 1862, we have had a progressive tax system. That means that the rate goes up on income above a certain level. Everyone pays the same rate of the first few thousand they earn. Those that earn beyond that pay a slightly higher rate on the next tens of thousands.

During WWII, the top tax rate was 94% but that only hit on income over $500,000. In the 1940s, a half million dollars a year was a king’s ransom, and you got to keep most of what you earned up to that half million. So people became millionaires during the War. Howard Hughes being one you’ve probably heard of.

If you look at the growth of the US GDP and its wealth, it really never started to take off till we DID have a progressive (not regressive) tax system. Sorry, that kite won’t fly. Any modern examples of tax-less, government-less paradise. Oh, and paradise is off the table. Nobody has been there and come back to report on their economy or whether they have taxes or not.

@Cruiser In the details, I said; ”...or raising $1 trillion in additional revenues by closing loopholes that let big corporations and wealthy taxpayers get by with little or no tax burden?” Wealthy taxpayers are the top 1% It takes an income of $1,000,000 a year to join that club. We aren’t talking about the average small business owner. A small business may gross well over $1 million in a year, but its owner earns nothing close to that. The small truth behind the GOP’s Big Lie about small business is that they define a small business as any business with less than 100 owners. By that definition, lots of small businesses gross way up in the billions per year. Bechtel is a small business. All the major league sports franchises except the Packers are small businesses.

@Qingu Thanks for injecting a bit of historical reality for those who seem to yearn for the wonderful days when Slavery was still alive.

Cruiser's avatar

@ETpro All noble sentiments there but I think even you know that those loopholes are the evil and necessary “gifts” the corporations demand for their cash stream that props up our government. With out them, jobs go overseas and campaign donations cross the isle. Bulldozing“K” Street and radical campaign reforms are a sure fire way more tax dollars will find their way into Geitners purse.

CaptainHarley's avatar

@Qingu

Pot, meet kettle. You’re a fine one to be accusing anyone else of resorting to a political party’s “talking points!” You sound like a shill for the Democrats.

ETpro's avatar

@Cruiser You have very little faith in the productivity of the US worker if you think that corporate donations keep jobs here and make life tolerabl—and that only by going deeper and deeper in debt publically to fund corporate welfare can we keep corporations here. The US worker is still the most productive worker on Earth. Thise turncoats who have gone so multinational they’d rather live in a mail drop in some banana republic than do business here can be replaced. If they want to flee, let them go. I’d like to see corporate taxes dropped to 20 or 25% instead of the current 35% top rate. That top rate only hits the little guys who are building the start-ups that actually generate our new jobs. THe big boys have the finances and staff to avoid taxes. over ⅔rds of large US corporations pay NO taxes. Drop the top rate to something competitive with the rest of the world, and make everyone pay it. No more selecting this or than industry for corporate welfare. This is one place where I do believe in the GOP free market rethoric, not the GOP behavior or corporate welfare for the well connected, AKA Crony Capitalism.

@CaptainHarley Whether someone is quoting talking points or not is irrelevant to the truth. Some talking points are true. Some are false. The fact a political party put them out has no effect on their validity. So claiming something is a talking point is a red herring in political discourse. So what? Is it true or false? If it’s false, rebut it, don’t try to shoot it down by assigning a label of talking point to it.

CaptainHarley's avatar

@ETpro

No, it’s pointless to constantly reiterate reasons why a particular talking point isn’t valid. Most of them are just tired and shop-worn anyway.

ETpro's avatar

Suit yourself, but don’t expect to win a debate with me simply by pointing out that this or that political party said the same thing. That has noting to do with the validity of the statement. Political parties say lots of things that are absolutely true.

CaptainHarley's avatar

I have nothing to prove, so “winning a debate” isn’t even on my radar.

Jaxk's avatar

I’ve been away fort a few days but it’s interesting to see the debate on this. I think it may be appropriate to make a few comments, especially on some of the more fallacious points. It’s always amusing to see the best argument liberals make are the all or nothing argument. If there are NO taxes, there is no fire department or police (forget that these are local issues anyway) so therefore you need a huge government bureaucracy to give you minimal security. Huh? If we’re talking federal we’re talking about things like the Department of Justice spending $50—$60 million buying guns for the Drug Cartels in Mexico. Now there’s a service we can’t do without.

FDR is always one of my favorites as well. The double dip in ‘37 is a good one for the liberals. They love to say it is a result of the minuscule drop in spending while ignoring the huge tax increase that happened at the same time.

And let’s talk a little bit about taxes and spending. Spending works about the same as a temporary tax holiday except that a tax holiday affects everyone. Either way it only works for the period of the spending or holiday. As soon as it ends whatever stimulative effect it had also ends. Taxes on the other hand are more long range and affect growth to a much greater degree. Taxes go up and long range (read capital investments) go down. Taxes go down and long range investments go up. Also spending works a lot like tax loopholes, they benefit the industry targeted. Government gets to choose who gets them and who does not. We’ll spend a lot of money but only union shops can get the contract. Or we’ll spend a lot to help make one product but not another. So the result is donate to your politician and manipulate your business to get the money or get penalized. The last thing we’d want is for business to be making business decisions, much better to have them making tax decisions or even better political decisions.

The other thing we hear a lot is the tax rates of the fifties and sixties. Hell we grew while people were paying up to 94% at the top rate. What they don’t mention is that very few ever paid that rate. They sheltered their income. Hell back in those days people would invest in companies that were going under just to get the tax write-off. A tax write-off was more lucrative than investing in a company that was making money. That’s the kind of thing that happens when the tax code gets up side down. And let’s not forget that we didn’t have the onerous tax burden at the state level that we have today. I love the argument that if a company wants to move overseas, let them. We’ll get new companies that love our onerous regulation and tax burden. What a misguided theory.

I should mention the theory that our debt is not a problem when comparing it to individuals buying a house. They spend up to a few years worth of earnings on a house without problems so why can’t we carry a debt of few years worth of revenue for our national debt. It’s because we are deficit spending. When you buy a house and the house payment is twice your earnings, YOU GO BANKRUPT.

There is nothing wrong with plugging some of the tax loopholes. I think it would be in order to define what those loopholes are. Is it a loophole if everyone gets the same tax treatment? Did we plug a loophole by saying if you earn a certain amount you your taxes are treated different than everyone else? If your house payment is above a certain level, you can no longer deduct it? I think we have vastly different ideas about what a loophole really looks like.

If you want to get rid of subsidies, I’m all for it. But let’s not pick and choose. If you want to get rid of oil subsidies, get rid of subsidies for windmills as well. If you want to get rid of ethanol subsidies, get rid of all farm subsidies (I can’t help but wonder how many jobs we create by paying farmers not to plant crops).

And if we want to rescue this economy, let’s start doing some things that will have immense impact like drilling for oil. Or repealing Sarbanes-Oxley. The natural state of any economy is growth. Government can only hinder this process. Some government is necessary but the more government involvement you have the slower the growth. Keep what we need but get rid of the rest and you’ll be surprised how quickly we can get back to a growing economy.

Qingu's avatar

@Jaxk, “It’s always amusing to see the best argument liberals make are the all or nothing argument.”

Wow, that sounds pretty bad. Who in this thread are you referring to?

And do you have any evidence that:
• Drilling for oil will immediately boost the economy
• Many people during the 50’s sheltered their income instead of paying high marginal taxes
• American companies move overseas because of high tax rates here
• National debts work like homeowners’ debts
• Government can only hinder economic growth

Because as far as I know, none of these things are actually true. They are things that conservatives like to repeat over and over again, though.

Jaxk's avatar

@Qingu

Try this one “If you can show me how we could prosper and grow by eliminating government and taxes”.

As for the rest, I assume you feel I’ve rebuked by saying ‘Nah-uh’. Nah-uh.

Qingu's avatar

ETPro was saying that luceile was making the all-or-nothing argument. He explicitly said otherwise in the very same post. Reading comprehension?

And you’re the one who made those claims; the onus is on you to back them up. Any moron on the Internet can make grand claims and then maintain they’re true unless others disprove them.

ETpro's avatar

Middle of the workday here now, so I can’t fully respond to @Jaxk latest all-or-nothing characterization of liberals. It is interesting, though, how often the Con men use such appeals.

I just popped in to note that in the middle of hard economic times when we need job growth, the best strategy is to neither raise taxes nor cut spending. So if the only deal they can get right now is to simply raise the debt limit and kick the can down the road, that may be a wise move.

Jaxk's avatar

@Qingu
Except that @lucillelucillelucille didn’t say all or nothing. You may have a comprehension problem of your own.

Do you want me to validate what I said or what you said. Frankly I’m not sure what you don’t understand. Let me try a couple and see if you can get a better feel for the reality.

If we open up the drilling, Oil markets will respond. Even if it takes a year to get started the impact on oil futures will begin. When speculators see that there will be more oil, it decreases the value of futures. The actual drilling will in fact create jobs, hell even the exploration will create jobs. Oil platforms have already moved as a result of the shutdown in the gulf and if they believe we will get going again they will come back. It’s really not a difficult concept to grasp. The impact from OPEC is less predictable. Currently they have a stranglehold on the world. If that power is predictably reduced, the Cartel is likely to start coming unglued as it did in the 80s.

We have enough known oil reserves in the US to last us 300–500 years at our current rate of consumption. More than Saudi Arabia. We merely need to allow the oil companies to get it. Currently we have no substitute for oil but even if we did, even if all our cars, trucks, and airplanes suddenly became operable on water we would only cut our usage by about 60% and we’d still be importing oil. So developing our own resources is independent of any effort to economize or inflate our tires.

As far as tax shelters, see here.

As far as companies moving overseas to avoid tax and regulation. I guess I have to ask why you think they do it. Is it just because they’re evil?

National debt and homeowners was a response to @ETpro ‘s comparison. I’m not sure what you don’t understand about it.

As for government involvement, Again, I’m not sure what your missing. The more tax and regulation the less economic activity. It’s a fairly simple concept, the less money business has to invest, the less business they do and the less productivity they get.

Qingu's avatar

@Jaxk, I believe I asked for evidence, not what you think will happen. What has happened in the past when we’ve opened up oil for drilling? Did that boost the economy?

and do you even know anything about oil shale? About how long it takes, and how expensive it is, to actually process the oil from those deposits? I don’t think you do, or you wouldn’t be so sanguine.

Re: tax shelters, the source does not support your claim, which was: “Hell we grew while people were paying up to 94% at the top rate. What they don’t mention is that very few ever paid that rate. They sheltered their income.” Can you please support this claim? And can you show that the increase in “real tax payments” was a result of widespread dropping of tax shelters, as opposed to the rich simply absorbing a greater share of wealth (and thus having more to tax) during the Reagan era?

Re: companies moving overseas, you completely missed my point. I don’t deny that corporations will move operations overseas if we rise corporate tax rates. I’m asking you for evidence that millionaires and billionaire individuals will move their businesses overseas if we raise marginal tax rates on such individuals. Any evidence?

Re: debt, I’m not sure why you think national debt is usefully comparable to homeowner debt. Can homeowners for example print money and levy taxes? It’s a naive comparison that is ultimately damaging to discourse.

Re: government involvement, again, you seem to have a very naive understanding of economics, based on this post and other posts you’ve written in the past. I mean, I honestly don’t even know how to respond to someone who is saying regulation always hampers economic activity. (See Silicon Valley for a whopping counterexample; see also the entire media industry that relies on regulation against piracy and regulation that ensures adherence to standards).

I mean, @Jaxk, one of the basic problem with everything you write on Fluther is that you have a high schooler’s understanding of economics, yet you proclaim economic maxims with supreme confidence. In another thread for example you didn’t know what a liquidity trap is, or even what monetary policy is, and yet you felt confident enough to lecture about interest rates. I am reminded of conservatives who know nothing about climate science or evolution and yet speak with great confidence things like “earth just has natural cycles” and “if you found a watch on a beach you’d expect it to have a designer, not to have evolved”—i.e. things that might sound reasonable to someone with a high school understanding of climate science or biology, but are absurd to anyone who has actually studied the subjects.

Jaxk's avatar

@Qingu

I have to admit, I grow weary of your insipid blurbs on the economy. You love to throw out terms and ask someone to explain them to you. Frankly I have neither the time nor energy to do so. Try looking them up yourself. Maybe if you had at least a high schooler’s understanding, I wouldn’t have to explain everything to you.

You say I missed your point on tax rates yet what you posted was :

”• American companies move overseas because of high tax rates here”

Now you say oh no, I meant individual. Forget the fact that it’s not what I said originally, at least address what you said.

The tax rates are little more complicated so you’ll have to try and stay with me on this. In 2000, it took $313,469 to get into the top 1% of taxpayers. In 2008 it took $380,354. If you adjust for inflation the numbers are 2000 = $391,932.73 and of course 2008 = $380,354. That is an income growth rate of -3% (approximately). Their share of taxes however increased 10%. And that includes the period of the Bush Tax Cuts.

As for the oil shale, I’ve been looking at this for a long time now. And given your resistance I suspect my granddaughter knows more about it than you do. The oil shale is at a point about where the oil sands of Canada were in the 80s. not yet ready for full production but very lucrative in early testing. Until the government opens this for full production we won’t get the full benefit of refining the production techniques. It is likely to be ten years or more away from full production but we have many other resources to bridge the gap. ANWAR and off shore to name a couple. There are many stumbling blocks to bringing this into full production. Water is but one issue but not an unsolvable one. The development of entire communities to support the massive workforce is another. Those however are problems that we should relish having. You can learn a little more here

And frankly The rest of your argument is rather absurd. Do you really think a designer watch evolved? What is your point?

And if you have a problem with the Home Owner example, talk to @ETpro, he brought it up. We may be back to your reading comprehension problem.

jerv's avatar

@Jaxk Last I checked known reserves versus current consumption rates, it wasn’t nearly that rosy, and the oil in Alaska would take almost as long to drill for as it would last.

Canada, on the other hand…. they have oil!

Jaxk's avatar

@jerv

Proven reserves are only counted after you drill and prove they are there. If you can’t drill you can never have any proven reserves. This is a semantics argument that liberals constantly use. The USGS has estimated about 10 billion barrels recoverable in ANWAR (the 50% probability or expected results). They will never be counted in proven reserves until we are allowed to drill.

It is interesting to note that in 1977 the estimate for Prudhoe Bay was 9.7 billion barrels or about the same as ANWAR is today. We have been pumping oil from there since 1977 and estimates have grown to 25 Billion barrels. To think that ANWAR is not worth the effort is hardly justifiable. And since the Alaskan Pipeline is only half full these days the production can be ramped up quite rapidly.

Canada has oil in the oil sands, we have it in oil shale. We have just as much if not more.

jerv's avatar

@Jaxk I am not the type to gamble that much on a coin toss unless I am either suicidally desperate or totally apathetic. Therefore, I take your numbers with a grain of salt though I am not refuting them.

ETpro's avatar

@Jaxk On your share of taxes, I assume you are wroking with numbers that think tanks like the Heritage Foundation provide to make the case for more welfare for the rich. Those numbers look at income taxes, which very few ordinary working stiffs even pay. Most Americans pay payroll withholding taxes and other taxes, and all those are excluded from the heritage foundation’s calculations. The income and wealth disparity in the US has increased steadily since 1980. Now, with the Middle Class’ home equity gone and much of their 401Ks depleted, if we don’t reverse that trend, the economy simply will not recover. There soon will be no middle class anymore. We will be back to pre Great Depression times of the working poor and the robber barons. I really don’t think that will be good for your business or for mine.

Jaxk's avatar

@jerv and @ETpro

Actually the data cited above comes from the National Taxpayers Union. It’s still IRS data so I don’t know what the dispute is all about. Here’s another look at IRS data. The numbers are the same but there’s a lot more detail. For instance the top 1% earned 20% of all income and paid 38% of all taxes. You may also be interested to note that in 2008 the top 1% paid a 23% tax rate, the highest of all the brackets. The second highest was the top1%-5% at a 17% rate, and so forth.

You can take it all with a grain of salt or go back to the liberal blogs that may find a way to manipulate the data into something else. I think I’ll stick with IRS data. At least it hasn’t been manipulated to get the desired results.

ETpro's avatar

@Jaxk If you will look at your own chart linked above, you will note that it is saying the top 1% paid 38% of all income taxes, not all taxes. Again, hardly anyone in America earning below the top 10% pay ANY income taxes. That leaves out a tax of 15.3% of wages on the first $106,800 in earnings. The “tax deadbeats” that aren’t paying their “fair share” of income taxes by the income tax chart you pointed to (Table 1) are in the bottom 90% of income earners, earning less than $113,799 in AGI. That bottom 90% is paying an additional 15.3% on every penny they earn. Those in the top 10% are not., Those in the top 1% avoid it on a minimum of $273 554 in earnings. That’s why every right-wing website out there and every right-wing think tank and PR firm focuses solely on Income Tax.

That means that a tax system originally designed to be progressive has become increasingly regressive.

jerv's avatar

@Jaxk The last sentence of @ETpro‘s post is what I complain about the most. So tell us straight up, do you favor regressive taxation due to flaws and loopholes? Is it the duty of it’s taxpayers to give money to those that don’t actually give anything for our investment? Unless unemployment drops by half by the time you reply, I don’t see how you can justify the current system.

Jaxk's avatar

@ETpro @jerv

I know your trying to be fair so I won’t play the name games. The employee only pays half that or 7.65% (the other part is a tax on the employer). Current rate is actually 5.65% but who’s counting. I’m not sure why you feel you need to make every post as offensive as possible but I’ll try to restrain myself. The numbers are not a result of any right wing think tank but the same numbers they’ve always been. Hell it was your guy FDR that set up this system.

If I understand your point, you want to eliminate the SS and Medicare tax and just call it all tax. Remove any indication that it’s your retirement fund or you medicare fund. I can see an argument for this since the congress uses it all as general fund anyway. Nonetheless, I kind of like the illusion that a portion of my check is set aside for my retirement. If we just go to a general tax then at retirement time it really is welfare. I don’t care for that so much. Bush tried to put a small piece of SS away that really would be in a lockbox, that really would be yours. No one seemed to like that idea but I like the idea of tax and welfare even less.

I know your argument is not to change the system but if I look at SS as my retirement, then I don’t have a problem with taking a portion of MY salary and setting it aside. If I look at it as tax and welfare, then everyone needs to share the welfare burden as you suggest. This may sound like semantics but I believe it is significant.

Now if your point is to raise the ceiling on SS wages or even eliminate it, I’m not terribly opposed to that. I just couldn’t use your argument as justification for it. Basically, I believe we have a progressive tax system, we have a retirement system, and we have a medicare system. They are not all the same thing and I don’t want to make them all the same thing. Nor is SS a tax loophole.

Ron_C's avatar

This all seems very simple to me. If we were a country of about 30 people, the conservatives are correct, we would need little or no government. However, we are a country of at least 300 million people, most good, some very very bad. So the real question is how do you separate the good from the bad and prevent the bad individuals, sometimes organized into corporations from preying on the rest of us. Also how to you provide the services so that people can live and work in a comfortable environment and even be assured that your car is parked where you left it while you are at work?

We developed government to take care of thing that we don’t have time to consider like roads, utilities, police, even insurance and health care. Let’s face it most of us don’t want to be concerned with the everyday nuts and bolts that hold our civilisation together. We elect government to perform those services. Government starts locally, then county, then State, then Federal. It is pretty simple like a business organization chart.

Of course the government does some things like starting wars in Vietnam, Afghanistan, and Iraq. It involves us in dubious corporate enterprises like pipelines across Afghanistan and other mischief. In the end we are ultimately responsible because we elected the clowns that started this mess. We also elected them to stop predatory practices in business, insurance, and even health care. If we were a small country we wouldn’t need these regulations.

The question becomes, do we continue to elect and support the group that spent us into this bankruptcy and follow their recommendations to got out of it or do we try a new way without burdening ordinary citizens and transferring their remaining wealth to the richest citizens and foreign nationals?

I have had it up to HERE (picture me with my hand above my head) with the radical conservatives creating these bills then refusing to pay for them. I see nothing wrong with closing tax loop holes, abandoning all subsidies to industry and re-instituting sensible ones, roll back the Bush tax cuts, and establishing a tariff system to compensate for goods made with slave labor overseas.

The Republicans used our credit card to the tune of 9 trillion dollars and don’t want to pay the bill. There best solution is to blame it on the Democrats.

Don’t get me wrong, some democrats are at fault for approving the wars and bureaucracy build up, they should simply be voted out of office. However, what the republican leadership under the guidance of the Tea Party is doing, is very close to treason.

Nick985's avatar

If you raise taxes on anyone, even a little bit, they can’t buy any products , which people make and put their money into making, which in turn creates jobs. People need to be more competitive so they can prove their products are better than someone eldes products. Then that person the competitor is competiting with is going to have to prove his products are better, which makes better products for both competitors, which people might buy, which then makes more jobs. Cut spending, stop making all the poor people being dependent, teach them to be responsible and get a job. Stop taking from the producers and give it to the non producers, or the people who don’t produce as much.

Ron_C's avatar

@Nick985 I am all for cutting spending but also believe that there are places that the government must spend: Infrastructure, financial regulation, food safety, moderate military spending, regulation of interstate commerce, negotiating prices for Medicare drugs, border security, and unfortunately a scaled down prison systems, environmental safety and preservation, to name a few.

There are some things that need federal intervention when states refuse to handle their responsibilites like education. I pity someone subjected to public schools in the deep south without the insistance from the federal government that all children need a good primary education.

ETpro's avatar

@Jaxk My error on the Payroll Deduction tax. I use contractors in my business. I have no at-will employes. And I just Googled the rate without thinking who pays. Thanks for pointing out the error in such a gentlemanly manner.

What’s truly relevant though is not the exact percentage Joe Sixpack pays in total taxes versus the exact percentage a Rockefeller pays. My concern is that for 3 decades now, the wealth and income disparity in the US has been growing. In the last 10 years, the bottom 60% actually lost income in constant dollars. Tho group with incomes in the 61% to 90% range just barely advanced in income. They basically just held their own. Both these groups lost a great deal of the financial wealth they had previously held due to home equity decline and losses on savings such as 401k accounts.

The top 10% gained. But even there, gains were heavily weighted toward the top. The top 1% did very well. And even among them, the gains were tilted VERY heavily toward the top. The top 1/100th of 1% gained an enormous amount of financial wealth. And the Bush tax cuts for the wealthy wiped out the estate tax, so the wealth that’s collecting in that rarefied air will be there for generations. If we keep that trend going we will end up as a banana republic is generation or two. That is only good for the wealthiest billionaires in the nation. Everyone else loses under that scenario, That’s what I’m opposed to.

GracieT's avatar

@Nick985, I am disabled. I was disabled yesterday, am disabled today, and will be disabled tomorrow. That’s it. As much as I would like to not be disabled, my body and my
doctors tell me not to get my hopes up. I have been able to
hold two minimum wage jobs
for a slight period of time, but
it is unrealistic to imagine that
for the long term. Because of
my disability I am on six
different medications. They
are not, by far, the most
expensive medications available, but for three of them
I am unable, despite personal
preference, to take generics. I
cannot take generics period.
Again end of story. If I did,
my seizure risk would be
extreme. I cannot and will not
disobey my doctors. Together
the three medications cost around $1400.00 for three
months. I am unable to work
and even if I could my medical
needs would not change.
Medicare is crucial to my
survival. I had to sue to get Medicare and I didn’t get it until year after I filed. And I was
lucky.
The government also takes
care of features of daily life
we take for granted such as
roads, police, fire control, little
things such as that. Even school lunches for children
who cannot afford them
through no fault of they’re
own. @ETpro and @Ron_C explained that much better than I could hope to. Don’t forget all of us that count on the government for some things.
And, by the way, welcome to Fluther!

jerv's avatar

@Nick985 I like my roads. I like the kid working the register at McDonalds to have enough math skills to count correct change thanks to education. I like having cops to catch murderers.

How much are those things worth to you?

As for getting a job, there are no jobs to get because the rich people are not doing the job we are paying them to do. Why should we pay for them to not produce anything?

Ron_C's avatar

Very good @jerv .“As for getting a job, there are no jobs to get because the rich people are not doing the job we are paying them to do. Why should we pay for them to not produce anything?” I wish the people working on the budget understood this simple basic fact.

jerv's avatar

That is something I still haven’t seen an adequate explanation for. Many have defended the tax cuts for the rich by saying that their investments fuel our economy, that they account for 347% of consumer spending because us “little people” don’t spend a penny, and that we would collapse if the top earners paid the same percentage of their income as the middle class.

My response is that they don’t know enough about ROI to discuss finances, don’t know enough about supply and demand to discuss the free market (last I checked, millions of people buying a gallon of milk each spent more than one person buying a Maserati), and don’t know enough about history to know what does/doesn’t work.

Now, if someone doesn’t know anything about anything that they are talking about, how seriously are you able to take them?

Ron_C's avatar

@jerv “Now, if someone doesn’t know anything about anything that they are talking about, how seriously are you able to take them?” Unfortunately, they’re talking to people that know even less, like the Tea Party. In the old days they were called the “no nothings”. They reject history and science. They think that it doesn’t matter anyway because Christ is coming back soon, so at least the poor can be punished for existing.

jerv's avatar

@Ron_C Ironically, I have a link to this question as I type, and the reason I find it ironic is that many of my discussions with Tea Partiers make me want to just give up and say “Who gives a shit?” before walking away and resigning myself to the fact that we’re screwed.

Cruiser's avatar

@jerv If you could please clarify your comment here… “there are no jobs to get because the rich people are not doing the job we are paying them to do.”

What job are you paying the rich people to do?? I am having a hard time with pinpointing who these rich people are that you or anyone would pay to do a job?? In my world the rich are usually paying you and I to do a job not the other way around.

jerv's avatar

@Cruiser The normal logic I have heard defending the current trickle-up policies are that the rich people invest in companies and that those companies in turn expand and thus create jobs, therefore, giving the rich more money will allow them to invest more into companies and thus create more jobs.

Since they are getting to keep >80% of their incomes while the middle class keeps <70%, it seems fair to say that we (taxpayers) are paying them, and since that added money isn’t resulting in any jobs, we aren’t getting what we are paying for.

Jaxk's avatar

@jerv

I know accuracy is not a requirment for this site but it seems that even if we’re just ‘spitballing’ the numbers they should have some relationship to reality. It works out like this:

Top .1% – pay an effective rate of 22.7%
Top 1% – pay an effective rate of 23.27%
Top 1–5% pay an effective rate of 17.21%
Top 5–10% pay an effective rate of 12.44%
Top 10–25% pay an effective rate of 9.29%
Top 25–50% pay an effective rate of 6.25%
Low 50% pay an effective rate of 2.59%

Seems pretty progressive to me. Is this the bell curve you guys refer to all the time?

ETpro's avatar

@Jaxk Here are numbers compiled by the IRS for 2007. This shows the slow erosion of taxation among the wealthiest Americans. Add that to elimination of estate taxes, the 30 year growth of wealth and income inequality, and you see an emerging picture of a growing oligarchy with a small number of incredibly wealthy individuals running the government as a private enforcement arm of their will. Rather like a banana republic. Not my idea of the American Dream.

Jaxk's avatar

@ETpro

First, I’m not at all convinced the problem you cite is really a problem. But let’s say we want to correct it anyway. All of the proposals I’ve heard will cast a broad net in order to get these 400 people. We change capital gains rates, that will affect about 15 million taxpayers. Seems like a lot of people to penalize just to get even with the 400 at the top. Or maybe we want to hit them hard on inheritance tax. Hell we know that if you have a family farm or business, the estate tax will force a sale if it has much value. And who is it sold to, well corporations of course. Corporations are the only entity that doesn’t have an estate tax because they live on. So in order to get these 400 at the top, we force the gradual shift of assets from the individual to the corporation. This is one reason the farming industry is almost totally run by corporations.

The result of these two things that I think you want, is to shift income by the very wealthy to tax free income (tax free bonds and such) and to shift the wealth of the country to corporations. At least that’s what I fear will happen. At the same time we will reduce the income of the middle class and pilfer the retirement of those that have spent a lifetime, planning for retirement. Is it worth it to get those 400 people and will it fix anything.

jerv's avatar

@Jaxk Do you ever get the feeling that sometimes politics, religion, and economics are stranger than any hallucination dreamed up by clinically insane people on LSD?

Now, I thought that Capital Gains tax was tiered for pretty much that reason. It also seems to me that it would not be hard to implement a tier that affects those top 400 while leaving the merely wealthy untouched; something an across-the-board hike in CGT would/could not do.

Like many mathematical models, our tax structure breaks down at extreme values, The fact that that IRS pretty much stopped the tax tables at under $400K under the impression that few enough people earn more than that that there is no problem leaving a $40m/yr guy paying the same as a $400k/yr guy makes me think that they don’t have anybody who has the same math skills I had in the fifth grade.

What we have here is a “too little, too late” scenario. Pretty much anything that would’ve helped 10–20 years ago would be spitting into the wind now, and anything that happens now would run afoul of so many implications of The Law of Unintended Consequences that it’s not funny. Hell, the reason we are where we are is that we’ve have a few decades of people intentionally seeking ways to bring about those unintended consequences.

Right now, the only truly helpful thing would be to hit the reset button. Eviscerate the US dollar, defenestrate our current system, and start over from scratch. Anything less will -at best—merely slow our descent towards where we are currently heading; India-like poverty or the masses and a total collapse under the weight of unsustainability.

ETpro's avatar

@Jaxk This stuff isn’t rocket science. We have had taxation plans that worked well in the past. Most recently, Clinton ran 4 straight years of budgets not only balanced,n but in surplus so we were paying the National Debt down. I wouldn;t just return to this rates though. As I have expressed before, I think the corporate tax rate needs to be substantially lowered to make us competitive with other developed nations, but made more fair so all corporations pay their fair share. 60% or more now pay nothing, regardless of how much they earn. And I would go after tax code simplification and loophole removal before any rate increases. But the Clinton boom years show it can be done. It isn;t the impossible dream.

Cruiser's avatar

I am perplexed why there seems to such a great need to pin blame on an administration for our budget woes and whose policies fucked everything up? I doesn’t take a genius to see how our wars overseas has placed an immense additional financial burden on our country. I don’t think we had a choice in these matters either but plain and simple, if you sucked back all those dollars for the wars in the middle east we would not be in this mess or having these conversations. Most of the defense spending increases did happen on Bush’s watch but again these wars are not a Republican problem and Obama did inherit these wars and in the end it is an American problem we have and it is an American solution we have to find to rebalance this additional financial burden these wars have placed on our economy.

Ron_C's avatar

@jerv I had to answer the question in the link you posted too. Your list of who pays the taxes was informative. It also shows that wealth is steadily accumulating to the top and proves that “trickle down economics” is complete fiction. The last thing that anyone should want is for wealth to be transferred to corporations. Unfortunately there is no way to determine if a corporation was formed to do business or as a tax shelter. The only thing to do is to have a progressive rate for corporations with special considerations for S-corporations based in the U.S. Further, off-shored accounts need to be closely monitored and highly taxed. Corporations that operate out of “tax haven” islands or country need to be outlawed if the countries involved refuse to report corporation transactions to the IRS. That includes, if necessary, embargoing all transfers to Switzerland. I really hate the idea that you can hide ill-gotten gains in places where the financial gnomes have no responsibility other than keeping your accounts secret.

Jaxk's avatar

@jerv

I’m not sure what you’re arguing ‘for’ here. I thought it was your guy Obama that drew the line at $200K. Anything above that is uber wealthy. I have no love for the super wealthy. But I also don’t hate them. The top 400 earners make more money than I do, good for them. If there was some proposal that added a super rich tax, maybe we’d have a different discussion but there’s not.

It seems rather odd that you would think things are so bad that we need to destroy the country and start over rather than cut spending. And frankly being poor in this country is better than being middle class in most other countries.

Jaxk's avatar

@ETpro

I don’t think we have much disagreement on closing the loopholes for corporations and a lower more competitive rate would be desirable. Your argument on raising the income tax rates however, I find lacking. I could use the same argument to raise the income tax to 97%. We had that in the past so we could do it now. It just doesn’t work (hopefully, I don’t have to explain why).

I understand your argument about spending to stimulate the economy. I don’t agree with it but I understand it. Unfortunately when we did Stimulus, we expanded government massively. We grew the departmental budgets and hired lots of federal employees. When we passed the Omnibus bill, we expanded departmental budgets by 10% (on top of the stimulus expansion). We’ve expanded the IRS by a thousand employees for Obama care and god only knows how big the Department of health will grow. We’re winding down the wars in Iraq and Afghanistan but the defense budget isn’t shrinking, it’s still growing. We’ve added the Consumer Credit agency and a new agency to supplement the Mineral management department. All this is just off the top of my head and represents permanent ongoing government growth. We simply can’t afford it.

All the TARP, Stimulus, Cash for Clunkers, Unemployment, Mortgage Readjustments, etc., etc., we supposed to be a ‘Shot in the Arm’ not a permanent drip line. We have increased our spending by 30% over the past three years and there is no way to justify that let alone use it as a baseline for future spending.

jerv's avatar

@Jaxk My guy Obama? Puh-leeze! Just because I felt he was the lesser of two evils in ‘08, that doesn’t make him “my guy”, and there are enough reasons for me to want him out that I am hoping the Republicans offer someone I can vote for.
I feel that those on the low end of the top tax bracket get boned too, and fully support adding another tier or two to cover those over $1,000,000/yr; I thought you knew that.

I believe that our nation has enough wealth to do better though; a rising tide should lift all boats. I complain about the distribution.

Jaxk's avatar

@jerv

The Republicans will NEVER nominate someone that is pushing ‘wealth redistribution’. So I think you’re stuck with Obama.

Ron_C's avatar

@Jaxk wealth redistribution sounds like a bad thing. The unchecked accumulation of wealth including the ability to pass the full amount of your wealth to your heirs sounds horrendous and the beginning of a new dark age with feudal princes and private armies. It will the the complete end of democracy.

jerv's avatar

@Jaxk Actually, they have been for as long as I’ve been paying attention; it’s gone upwards, concentrating at the top for most of my life. Republicans claim that taxing the rich will remove the incentive to succeed, but why should the rest of us try to excel if we can’t get rewarded for our hard work? Productivity and profits are at record highs, so where are our props? Even cost of living raises would be nice, but many Americans don’t even get that or a living wage. All of the profits go elsewhere; hard work has no ROI except for the lucky.

ETpro's avatar

@Jaxk I have looked at top marginal rates from 1913 to today. We never had a rate of 97%. The highest was 94%, and that was in the middle of WWII. And it only kicked in on income over $250,000. That may not souldn like much money today, but a quarter of a million was a king’;s ransom in 1943. People became millionaires even under that rate. But unless we are in the sort of fix we were in during WWII, I certainly wouldn’t propose anything close to that rate. We did well under Clinton’s top rate of 39.6%. I’d start by eliminating loopholes on the current 35% rate and see where that gets us. If we must raise any rates, I’d make a new bracket of 40% that applies only to income in excess of $500,000 and index that break point to inflation.

Jaxk's avatar

@ETpro

Point accepted. I was spitballing the top tax rate (should have looked it up). It doesn’t change my point however which was just because we had it in the past doesn’t mean it’s good. And even with the 94% rate it would push taxes in states like California over 100%. It’s hard to pinpoint the exact number for optimum taxes without taking into consideration the level of deductions and all other taxes that impact incomes. Not to mention the economic conditions at the time of the change.

Obviously you don’t think the entire Clinton tax schedule would be good but that the tax rate of the top 1% of earners will have no impact on economic conditions. That seems odd since the top income earners have the greatest impact on both economic conditions and government revenue. I know we disagree on this but economic growth will have a much larger impact on revenues, deficit, and debt than the tax increase. So if I’m right and the economy slows as a result, we lose more revenue than we gain and likely go back into recession. If I’m wrong and the economy grows it’s only a matter of how much extra revenue we get. I don’t see the benefit in risking a double dip on this recession. And even if your right in a theoretical sense, the rising tax rate will have a detrimental psychological impact on investment. And provide even greater incentive to keep money off shore.

ETpro's avatar

@Jaxk I would never think of raising rates anywhere near that high unless the nation faced an existential threat as we did in 1942. Hitler’s grand plan for the world was that after Germany defeated the Allies, he would enslave all who were not pure Aryans and use them to keep things running while his eugenicists bred a perfect cadre of blond, blue-eyed, white-skinned Aryans He was then going to exterminate all the rest of us just as he had already started doing with Jews, Homosexuals, Gypsies, socialists, Marxists and union leaders.

I don’t particularly like high taxes, but there are some things important enough to pay for.

We tried a tax cut for the rich like the Ryan budget pushes under George W. Bush. It made the deficit mushroom. Bush doubled our debt. His tax cuts put us in the debt crisis we are facing today. And hos tax cuts for the rich did not produce jobs. Bush created the fewest jobs of any president since Herbert Hoover. In fact, he created fewer jobs with his giveaway toi the rich than we created job seekers. So the net effect of tax cutting for the rich is to cost us jibs, not create them. So all the GOP blather about shoveling money to the “job creators” is propaganda for the ALEC mission to use the government as a tool to enrich the oligarchs and corporate jet setters who finance them.

Now, if the tax rate is way too high and you cut it, that does spur jobs. But that is no longer the case. The tax rates are now too low. We cannot do the investment we need in the future and continue to spend more on defense than the rest of the world combined. If we try to maintain our American Empire defense posture and balance the budget by slashing investment in education, infrastructure and aid to the needy, we will give away our future and sink into third-world status. The oligarchs begging us to do that for their sake will simply move on. They’re multinationals anyway.

Here’s a great summary of the situation we face.

Jaxk's avatar

@ETpro

We’ve been through this numerous times. I understand why you want to use that job creation number but you leave out the latest president when you do. Barrack Obama has the worst job creation record since Hoover. What people really care about and what has always been used to measure jobs, is the unemployment rate. I notice you steer clear of that one. And shouldn’t be ignored that Bushes job creation record after he passed his tax cuts were quite substantial. So you want to isolate a statistic, ignore the preformance of your favorite guy, and ignore the results of policy changes, to make an erroneous conclusion. And what’s striking is that you repaeat it over and over.

Of course we spend more on defense, we spend more on everything. And if you’re slashing budgets why do you never talk about the crap that needs cutting. Maybe the Fulbright Foreign Scholarship Board or the DoE.

I’ll ignore your blogger, that’s all I need is to start responding to every hair brained blogger that thinks he has a point.

jerv's avatar

@Jaxk How sustainable was the growth due to the Bush cuts? Considering that they are still in place, I think it safe to say they were more nitrous than turbocharger; just a short-term, one-shot deal.
Besides, isn’t it up to the private sector to create jobs? All government does is affect how much money they have to do so with, and given how many are recording record profits and CEO bonuses, I don’t think that’s an issue. About all the government can do that might be effective at this point is incentivize hiring full-timers earning a living wage unlike the McDonalds hiring blitz.

ETpro's avatar

@Jaxk Fair enough. You asked for it. I know Republican talking points include blaming the job loss numbers the day he was innaugrated on Obama, but you and I both know that’s ridiculous.

Of course, we can’t cite full term numbers yet, but when Obama inherited the office from his GOP predecessor, we were hemorrhaging nearly 800,000 jobs a month. Within 2 months, Bush’s deepening job loss curve turned the corner and losses began to shrink. Here’s the fullest curve I can find. We’ve added private sector jobs for the last 14 months. Somehow that fact passes through the GOP spin filter and erupts as a garbled bunch of self-contradictory claims. The Stimulus didn’t work. Not one job has been created. Government can’t create jobs. Elect us, and government will create jobs. Yeah, right. Nothing illogical there, hey? Truth for the brain dead.

Jaxk's avatar

@jerv

The current recession had nothing to do with the Bush tax cuts. Just as the Clinton tax hikes had nothing to do with the 2000 recession. The cause of a recession is quite different than the cure. Just as a broken traffic light may cause an accident, fixing the light would cure the damage from the accident. Lower taxes won’t avoid a recession nor will higher spending avoid it. If increased spending were an recession inhibitor we never would have had the 2008 recession. And if increased taxes were an inhibitor we wouldn’t have had the 2000 recession.

The biggest problem we have right now is the business environment is toxic. Steve Wynn provides some excellent insight into what is happening. Yes the private sector is the driver of the economy but they are huddled in fear of Obama’s policies. Circling the wagons, so to speak. “I believe in Las Vegas. I think its best days are ahead of it. But I’m afraid to do anything in the current political environment in the United States,” he said” (Steve Wynn).

A large part of the President’s job is to instill confidence rather than create fear. A lesson Obama has yet to learn.

Jaxk's avatar

@ETpro

There you go creating a strawman to tear down. Nobody is blaming Obama for the job losses from the current recession. But if you want to ignore those losses and compare to anyone else, you must give the same treatment to the person you’re comparing. If you want to compare the impact of their policies then compare from when there took affect. Bush signed the Tax Cuts in June of 2003. Obama signed Stimulus in Feb of 2009. The Tax Cuts had a much faster impact but let’s ignore that for now. We’ll compare Obama from 2010 and Bush from 2004. I don’t have a pretty graph so you’ll have to use the numbers to compare. According to the Labor Department (same labor numbers that are on you graph), Bush created jobs as follows:

Year——All Jobs——- Private Sector
2004 = 2.047 million = 1.900 million
2005 = 2.496 million = 2.310 million
2006 = 2.078 million = 1.869 million
2007 = 1.096 million = .803 million

I am not trying to promote Bush in all this, just looking for honest comparisons. I hope the data here doesn’t confuse your spin factory but I’ve been getting dizzy as you spin faster and faster. I know you want to portray Obama as a success story and god knows that job is tough enough. It becomes near impossible if you include all the facts.

jerv's avatar

@Jaxk Not quite what I meant. It may take me a little bit to try and take these pictures I have in my head and translate them into English though. Suffice it to say, it’s a second-order thing as opposed to a direct relationship.

ETpro's avatar

@Jaxk Curious if you aren’t trying to promote Bush why idi you select 4 years in the middle of his presidency, carefully excising the worst years. His final tally has to include all the losses of his two recession periods. That’s where the Wall Street Journal came up with his 8-year tally of 3 million jobs. Fewer new jobs than workers entering the workforce, so a net loss.

Also, this recession actually began in 2007, not 2008. It was no more Obama’s doing than the Great Depression was FDR’s fault—unless they owned a secret time machine. This recession is the deepest the US has experienced since the Great Depression. So to expect a new president to step into the oval office one day and have everything running ship-shape the next is projecting magical powers on the office that it simply does not have. I think this president’s done a fair job at mending fences as fast as he can with Roadblock Republicans doing everything they could do in the Senate from day one to derail jobs initiatives in hopes Obama would get the blame, and they could get back in control of all branches of government.

The oft-heard claim that the President’s policies are what’s stopping business from rebounding are pure elephant poopaganda. What’s killing the business climate is consumer spending is incredibly weak. All the seeming value in people’s homes evaporated with the burst of the real-estate bubble. They can’t borrow., They haven’t money to spend. And laying more off by massively slashing federal spending isn’t going to send them flocking to the stores to buy. Slashing taxes for the rich yet again, as the Ryan budget and recent so called Cap, Cut and Balance joke did. The rich and the corporate jet set are going to invest that money offshore where the return is best. THey aren’t going to open factories and manufacture warehouses full of goods when they know consumers have no money to buy.

Jaxk's avatar

@ETpro

The time frame is quite simple. the recession started in 2000 and was therefore not Bush’s doing. It was compounded by the 9/11 attack which elongated the recession. I don’t blame Bush for 9/11 either. If you want to blame Bush for 9/11 you may want to count it differently. The main point here was to compare the action Bush took to cure the recession to the action Obama took to cure the recession. And to compare the results or lack thereof.

I don’t know why you think I’ve said anything to blame Obama for the current recession. I haven’t. Using that strawman is a waste of my time and yours. Likewise I’ve never said anything to insinuate FDR was to blame for the depression. Another strawman you love to create then tear down. I have no idea who you think your arguing against but it certainly isn’t me. I do however hold all of them responsible for the recovery. If you think Obama should not be held accountable for the recovery, we may have a point to argue. The real point in all this is the consistency of measures. If you want to discount the job losses from the current recession because Obama was not to blame for them, then you should discount the job losses from the 2000 recession because Bush was not responsible for them either. Just measure both Presidents the same way. That’s what I mean about consistency. And while I’m at it, when you keep telling us this is the worst recession since the great depression, is that a subtle way of saying Obama can’t fix it so he shouldn’t be held accountable for the recovery?

The Democrats have been in control of congress for the past 4 years. They have held absolute power of both congress and the Whitehouse for the past 2 years. The Republicans have not been able to get a vote on any legislation or even block legislation during that entire period. And for the past 2 years Obama has pushed through everything he wanted. At what point do you take responsibility for the actions you’ve taken. At what point do you stop blaming Republicans for what the Democrats have done. If 2 years isn’t enough, do you need 4, or maybe six? Or does it take a decade like it did with FDR?

I should also mention that I haven’t suggested that we lower taxes. Apparently that’s another strawman you like to create so you can tear it down. I have in fact consistently advocated stability. Leave the tax rates alone and let us recover.

You love to criticize the Ryan Plan but offer nothing in return. You want to criticize the Cut, Cap, and Balance but offer nothing in return. In fact the Democrats didn’t even propose, let alone pass a budget last year. Kinda shows how many idea they have. Even the budget that Obama submitted this year was so bad it was unanimously defeated by both Democrats and Republicans.

You want to tell us that the Stimulus wasn’t big enough even though it was ten times the amount FDR spent in his first term (constant dollars). You want to criticize business for holding money off shore and apparently think raising taxes will incent them to bring it home. You say business will invest overseas where it is more profitable but see no reason make us competitive. You say we have no purchasing power yet we import $2.5 trillion in goods annually. Somebody is buying those and and if we were competitive some could be made here. I would hate to think we might want to encourage domestic businesses to compete for those dollars. Consumers have money, they’re just spending it on more competitive products. All these problems are solvable just not by discouraging domestic business. If you want an economy to grow, you need to be business friendly. What a concept.

I leave you with this thought. It is part of the testimony from Henry Morgenthau, Jr. he was FDR’s Secretary of the Treasury from 1934–1945. In 1939 he testified before the House Ways and Means Committee:

“We have tried spending money. We are spending more money than we have ever spent before and it does not work. And I have just none interest, and if I am wrong . . . somebody else can have my job. I want to see this country prosperous. I want to see people get a job, I want to see people get enough to eat. We have never made good on our promises. . . . I say after eight years of this administration we have just as much unemployment as when we started . . . . And an enormous debt to boot!”

Ron_C's avatar

@JaxkThe time frame is quite simple. the recession started in 2000 and was therefore not Bush’s doing.” If you want to get that technical, the recession started during the Reagan administration with the huge decrease in taxes for the rich, raiding Social Security, tremendous increases in the military budget and in federal government, and the attacks on unions. It was further exacerbated by free trade policies that used tax breaks to ship jobs out of the country. Additional changes in lending laws, excessive spending by both parties, and programs like the medicare drug las which was meant as a poison pill to break medicare.

Add that to the failure of congress to approve appointees to critical regulation agencies, and reduced funding to agencies that could have averted the worst of the meltdown and you have us were we are today. We have a dysfunctional congress, poor regulation of Wall street, and the greatest transfer of wealth from the middle class to the rich in history.

If Obama completes his term without an armed insurrection by the middle and former middle class, he deserves sainthood, not just another term as president!

Jaxk's avatar

@Ron_C

Interesting. So you consider the Reagan years and the Clinton years as recession. I remember those years as pretty good. Of course back in the Reagan years I didn’t make much money but I didn’t know I was poor. I just thought I didn’t have any money. We’re much more enlightened today. And I have to agree we need more people in the government agencies to watch porn all day. Hell how will those porn sites survive without all those additional viewers. They obviously stay quite busy.

I will agree with one thing, Obama should be worried about an armed insurrection. But I doubt there much concern about sainthood.

Ron_C's avatar

@Jaxk Reagan was the seed for the recession he managed to take a good economy and move the payments until after he died. In that respect, he was a pretty good politician.

The real porn is what happens everyday in the “too big to fail banks” and with Wall street speculators. I was not talking about censors, I was telling you that unregulated capitalism is just as harmful and dangerous as any communist government. We have the same sort of government as existed in the Soviet Union without the limited redistribution of wealth.

We have secret police, unregulated wire tapping, secret prisons, torture, probably concentration camps, and a continuing loss of freedom while the ruling class flourishes. We have also had several terms where the President either stole the election or committed treasonous acts to gain the presidency. The two freely elected presidents, Clinton and Obama are vilified while presidents that committed serious crimes were either pardoned or ignored (Nixon and Geo. Bush Jr., respectively). Obama isn’t blameless. He has failed to propose and support real change and possibly committed his own war powers violation by interfering with Libya.

However I see no relief for leadership in any of the proposed Republican candidates, only an accelerated race to the bottom..

Jaxk's avatar

@Ron_C

Get off the liberal websites. They’ll rot your brain.

Ron_C's avatar

@Jaxk the liberal websites my rot my brain but the Tea Party and ultra-right websites rot my soul.

Jaxk's avatar

@Ron_C

It’s comforting to know you have one.

ETpro's avatar

@Jaxk Oh I agree that the recession of 2000 wasn’t Bush’s doing. I wouldn’t blame that one on anything but bandwagon effect when the glory of the dot-com wrold became apparent. The recession of 2007 – 2010 wasn’t all Bush’s fault either. But he had a hand in causing it, as did many others on both sides of the isle, and his economic and tax policies made it much more painful to manage. I think that this Great Recession rests squarely on the shoulders of the Government and the Fed, especially under Alnn Greenspan’s leadership. Certainly it was Wall Street that ran amok, but it was Washington that cleared the way for them to do it, and even encouraged it so long as the bubble was inflating and it made the balance sheets look like real wealth was being created.

Jaxk's avatar

@ETpro

Please don’t make me do this!!! Hell I think I have to, I hate Alan Greenspan. He spent almost 20 years heading up the Fed and wondering how it worked. I rate your Greenspan comment accurate.

And now we have agreed twice. I’m beginning to question my ideology :)

Ron_C's avatar

@Jaxk and @ETpro I think that Greenspan was one of Reagan’s advisers that told him that if he cut taxes for the rich, they would trickle down to more jobs and higher income for everybody.

jerv's avatar

@Ron_C The old “horse and sparrow” that was discredited over a century ago. Great theory that looks good on paper, but fails to take the human element into account.

ETpro's avatar

@Jaxk Will wonders never cease? :-)

Ron_C's avatar

Right now manufacturers, suppliers, and banks are sitting on piles of money. The only way to pry that money from their hands is to increase demand. I have been business for a long time and can say for a fact that we do not expand unless we have assured future orders. When the economy contracts and orders fall off, we are forced to lay off workers and reduce the hours for the ones that are left. When the economy picks up we hire. We have just doubled our work force because we have more orders than we can handle. In effect we were forced to add jobs.

The problem with the current congress is that they do not understand the realities of business. Lowering taxes has NO effect on our business, increasing demand is the ONLY thing that will make us hire. It also makes us demand loans from the banks (which they are happy to do).

Honest banks and businesses are happy to lend money which has an excellent chance for being repaid. Banks that trade in unsecured loans and credit defaults are not honest, just pyramid schemes that sell credit defaults and confiscate property for resale.

jerv's avatar

@Ron_C How much of that low demand is due to taxes reducing “extra” money that could be spent on purchases though? They are related.

Ron_C's avatar

@jerv we are taxed at the lowest rate in history, there are no tariffs, the top rate for the rich is 35% with numerous loopholes that bring the effective tax rate to less than 20%.

You can look at the last 30 years, middle class income has been essentially stable or slightly declining and the high income group has the best century ever. That wouldn’t be bad if the middle income group was expanding but, instead it is declining. My guess is that we are heading for a depression and war, possibly a civil war. This situation cannot be long tolerated especially with the current power play from the right. Somethings got to give and you can be certain that it is not the rich that will pay or even harmed.

Taxes, in my business are not even a consideration for hiring. In fact, I heard a couple of guys say that “I hope I have a big tax bill next year, it means that I had a big profit”.

jerv's avatar

@Ron_C If the only taxes we had were federal income taxes, I would agree. I know that the 9.5% I pay on many of my purchases leads to fewer purchases though, so that is why I asked.

Jaxk's avatar

@Ron_C

First let’s look at the median income. It has not been stable nor declined for 30 years. It has declined dramatically in this recession but the trend is pretty clear. And saying that it has been flat for 30 years is pretty much a distortion.

Taxes are not the main consideration for hiring although payroll taxes as well as insurance and benefits are. The other piece of the puzzle is the profit. And after tax profit to be exact. When after tax profit is low you do less investing, less hiring, and tighten you belt. I have to make tax payments every month and I can tell you that even a 1% change in the rate gives me great consternation. It’s not income tax but there are several taxes I pay on monthly and quarterly basis. The rates have changed and they impact the business substantially. To say the tax rates don’t have much impact is really disconnected from reality. And I haven’t even started on the regulation issue.

jerv's avatar

@Jaxk Largely true, but it also ignores that fewer people are near the median as well, which has it’s own problems.

Jaxk's avatar

@jerv

I guess I’d need to see some data to back that up.

jerv's avatar

@Jaxk Think of it like this; what is the income of the average unemployed person?

Jaxk's avatar

@jerv

Cute but hardly definitive.

Ron_C's avatar

@Jaxk why don’t you compare the middle income salaries to ones in high income ranges, then tell me their salaries haven’t been stagnant?

Jaxk's avatar

@Ron_C

I’ve already conceded that the top 1% grew more if that’s what you’re looking for.

Ron_C's avatar

@Jaxk so what’s the problem. We are in the middle of a war on the middle class, their jobs and their freedom. Cutting spending until the real jobs crisis is resolved will only extend the problem if it doesn’t drive us into a depression.

Jaxk's avatar

@Ron_C

The war on the middle class is creation figment of your imagination. Obama has created this class warfare by demonizing industry and the rich. In doing so he has shut down any chance of expanding the economy.

I don’t know how we got to this philosophy that all money belongs to the government and anything they allow you to keep is somehow giving you money. So that if we don’t raise your tax rate, we’ve given you money. How exactly does that work?

And this whole idea of cutting spending is a joke. None of the plans currently being discussed cuts a single dime from our spending. They only reduce the growth of our spending. And they don’t even reduce the growth by very much. Instead of increasing our debt by $9 trillion we only increase it by $8 trillion. And we call that a budget cut. Incredible!

If we could ever get past the inflammatory rhetoric and discuss the real issues, we might have a chance to solve some problems. But it’s much easier to create some distorted talking point that totally misses the point, in order to shift blame and call each other names. The government is the only one taking money out of your pocket. Not Jeffrey Immelt or Bill Gates.

jerv's avatar

@Jaxk Poverty rates have risen which counters the increase at the top and is the basis of my previous argument that fewer people are near the median.

As for taking less from you than someone who earns one-tenth what you do, I call that “giving them money” simply because the net effect is identical. But we already agreed that w need more tax brackets to handle that, so lets not argue that point.

Jaxk's avatar

@jerv

The poverty rate is almost exactly the inverse of the median income chart. Goes down during good times and up during recessions. I’m not sure what point you’re trying to make here.

As far as more tax brackets, I don’t recall that agreement. As with most things, a little detail would be required before I either agree or disagree.

jerv's avatar

@Jaxk The second one was fairly recent, but I can’t find it now (break is too short).

However, I don’t follow you there since poor people are a subset of the below median crowd, so rising poverty means fewer non-poor in the bottom half and therefore fewer people close to the median.

Jaxk's avatar

@jerv

Not quite. The median income has dropped over the course of this recession. the poverty rate has also increased over the course of this recession. What it means is that many of the top two quintiles have lost thier job and fallen below the median resulting in a lower median income. The poverty level is bound to increase whenever you have high unemployment as people without jobs generally fit the poverty definition. The middle quintile has the same number of people in it as always. I’m not sure if we are arguing any real point here or merely splitting hairs.

jerv's avatar

I think we are looking at the numbers differently. I’m looking at the shape of the curve as a whole instead of a five-section bar graph.

Ron_C's avatar

@Jaxk first of all you absolutely cannot blame the war on the middle class on Obama. The pressure to make the middle class pay more and receive less was started long before Obama. In fact is it the reason that I dropped out of the republican party when Reagan was running for president.

Secondly, neither Obama, the democrats, or even middle of the road republicans are demonizing U.S. corporations. The real problem arises from the fact that International corporations can easily shop the world and find the cheapest labor and lowest taxes without regard to the damage it actually does to their market. Now that they have “personhood” granted by the U.S. supreme court, they can even buy U.S. elections autonomously. If you look close at the driver of this debate you would find (if allowed) international corporations and even governments that care little for this country.

The Tea Party is correct in one respect, this is or should be a revolution against huge international corporations that are taxing us without representation. After all that was what the first tea party was about.

Jaxk's avatar

@Ron_C

I would love to argue about this but you leave very few specifics. Generally just broad opinion type statements. “The pressure to make the middle class pay more and receive less”. Pressure from whom? Where do they pay more and how do you figure they get less? I just don’t know what you’re talking about.

And I’m staggered by anyone saying that Obama has not waged class warfare. He has demonized virtually all business. The banks were an easy target, Insurance co.s, auto makers, oil companies, Pharmaceutical co.s, He even attacked Doctors claiming they performed unnecessary operations just to pad thier profit. Hell he considers anyone making $200K rich and not paying thier fair share. If you look at democrats in general, they’ve attacked Walmart, Blackwater, and Haliburton, for years and have run numerous boycotts against any business that doesn’t conform their political agenda. Of course they’re fairly selective since Companies Like GE are moving jobs oversea, taking huge subsidies and paying no tax. Yet Jeffery Immelt gets invited to the whitehouse regularly and sits as an advisor to Obama. How the hell does that work?

Then you attack companies that move overseas solely to stay competitive. Wages aren’t even the biggest problem. We tax the shit out of any company that does not have a special relationship with Obama and regulate them out of business. You justify all the onerous regulation by saying they have to be kept under control lest they do something you don’t like and then scream when they move overseas. They didn’t want to move, you made them move.

You also seem to have a rather singular view of the Supreme court since Corporations were given the same voice as unions. Apparently, you would rather have them not be able to voice concerns when the government tries to railroad them into some insipid legislation that provides no benefit to anyone but costs a fortune. And just a note that you obviously have no idea what the Tea Parties are all about.

ETpro's avatar

@Jaxk I will back @Ron_C on that. You and I have been through a similar discussion. The initiative would have begun with Goldwater had he been able to win election. Since he couldn’t, it fell to Ronald Reagan.

For the last 30 years, wages for the bottom 60% have been declining. The next 30% have just held level. They earn about the same today as they did 30 years ago in real terms. Only the top 10% have gained, and the percentage of gain grows incrementally as the percentile shrinks. The top 1% have gained enormously. The top 400 income earners have seen their wealth go up like a skyrocket.

This is mainly because thousands of new tax loopholes have been inserted in the tax code, and almost all work only if you have income in the top group. They are useless to all the rest. The result is that the top 400 tax filers hold more wealth than the bottom 60% of the nation. They pay an average tax burden of around 18% while a middle class manager or executive secretary making $75K pays an average of 28% in taxes. Defending that as equitable—worse, claiming the rich get screwed as you so often do—is not a credible argument.

Ron_C's avatar

@Jaxk I wouldn’t say Obama “demonized” anyone. In fact he has been much too nice and tolerant. I guess the banks shouldn’t be criticized for an essential pyramid scheme selling credit default packages that had false AAA ratings, Or the poor pharmaceutical companies that have a multibillion extra profit for selling drugs because bargaining on prices was expressly forbidden by a bought and paid for congress. Walmart’s preditory practices and the fact that they discriminate with women’s salaries is just fine with you.

Black Water and any other mercenary company will NEVER be o.k. in my book especially when they follow no rules of engagement and take pot shots at civilians for fun. By the way Black Water did a bang up job in New Orleans while doing the job their national guard couldn’t do because they were fighting an illegal war in Iraq. What can I say about Cheney’s Haliburton? The scammed the U.S. out of billions of dollars in Iraq. There contractors are responsible for military people whose only offense was taking a shower. They perform functions that the military should do for themselves while making tremendous profits. As for the “doctors performing unnecessary operations”; I believe the republicans had similar complaints with medicare fraud. The organizations function is to provide medical care for Senior Citizens, not protect scam artists.

No, the only thing Obama did wrong was that he did not come down hard on any of those groups. You really need to look at what has happened to this country and our industrial base in the last 30 years and especially in the 8 years previous to the Obama administration because you complaints are all Foxed up.

Jaxk's avatar

@Ron_C

You forgot to argue against the oil companies, Insurance companies, and auto makers, I assume that was an oversight.

Jaxk's avatar

@ETpro

I’ve posted the earnings of the median income and it has grown consistently over the past 30 years. You think that you don’t need to do anything other than to say Nah uh and you argument is valid. It’s not. Everyone takes a hit during a recession and we are in one now. The drop in median income over the past 2 years is a direct result of unemployment. A problem we need to fix but haven’t seen fit to address over the past 2½ years.

The tax burden we’ve addressed before. I don’t know where you get your numbers, I assume you make them up. The top .1% pay 22.7% (effective rate) while the $75K earner would pay in the 6–9% range. This data is easy to extract from tax data but you probably won’t find it on the Huffington Post.

I am not sure why you feel if someone presents real numbers they must be claiming the rich get screwed. I have not been presenting that but you do consistently. Facts are facts and you’ll never understand the problem, let alone fix it if you don’t use them.

jerv's avatar

@Jaxk My reading of that data says closer to 9–19%. Without a little more resolution in the data, it is hard to tell if it’s fair since the top 0.1% earn >100 times as much. Got a better graph?

Jaxk's avatar

@jerv

Actually I don’t. The unfortunate part of these discussion boards forces you to use data already formatted and it takes a little more work to draw out the specific data you want. Let me try and show what I see.

If you look at the next to last chart, it gives you the income level to enter each percentage group. To be in the top 25% of income earners you must make at least $66K, To be in the top 10% of earners you must make $113K. If you then go down to the last chart, it shows the effective rate for each of these groups. If you look at “between 10% and 25%” (as shown above $66K-$113K) the effective tax rate is 9.29%. The 6% rate might apply if your deductions reduced you AGI below $66K.

A little convoluted but the data is there.

jerv's avatar

Regardless, I think that the gap between the effective rate and the marginal rate implies a shitload of loopholes. Not as many as pre-Reagan, but still, well, convoluted.

And one thing that is often overlooked it that the inequality amongst even the top 10% mirrors the rest of society. Yes, $400,000/yr is a lot, but $40,000,000/yr makes it look like less than pocket change.

ETpro's avatar

@Jaxk I said that the bottom 60% have seen their REAL income drop. Sure their annual income has grown. There’s been inflation. You only adjust for inflation when it suits right-wing talking points, I suppose.

Ron_C's avatar

@Jaxk I am not against oil companies, only their subsidies, auto companies are coming around and have benefited by the bailout and hard times. HEALTH insurance companies are definitely an anathema. They produce nothing, they heal no one, they only suck money out of the health system. When I was a kid, the only function of Blue Cross and Blue Shield was to pass money from employee health plans to doctors and hospitals. They need to get back to that role.

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