They’re not “the wealthy” anymore. They’re “job creators.”
Eric Cantor was on the teevee at the YMCA this morning going on about “job creators” and how it wouldn’t be responsible to raise taxes on “job creators”—Obama’s jobs plan calls for scrapping some tax deductions for folks making more than $250,000 a year—because then “job creators” won’t have the money they need to create jobs for all those job needers out there.
But the rich have never been richer than they are right now. If things worked the way Cantor and the GOP would have us believe, we should have record low unemployment right now. We don’t. The rich are richer than they’ve ever been, they’re getting richer, and they’re not creating jobs. The GOP’s proposed solution to all our economic problems—low taxes on the rich, obscene levels of income inequality, people dying for lack of health insurance—has been the policy of the federal government for thirty years and it is a failure.
Could a Democrat or two please get on the teevee and point this out?
@2 – “Socialism never took root in America because the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires” –John Steinbeck
@52 *high five* I couldn’t find a PM option so I’m just posting that here. 🙂
@52
If you conflate my position to be that of being in favor of no taxes and no government service, then I have to conflate your position as being in favor of a 100% tax rate and all services coming from the government. There! Now we’re both at the bottom of our slippery slopes…
Please don’t pretend that reasonable people can’t disagree on how much the government should tax and what services it should provide. I believe the answer to both of those questions should be the minimum amount possible. I also think that your items 1 & 2 should be a function of local government, 3 & 4 should be functions of state government, leaving 5, which I think we vastly overspend on by any account.
@ 57, do you believe military spending is at the minimum possible amount? If not, how would you like it to be reduced?
Sorry, Dan, but there are no “Democrats” left. All we have now are teabaggers, and moderate Republicans like Obama. Liberals and progressives are a figment of your imagination (or something you find only in other countries, and therefore anathema to American xenophobes).
@58
No. We spend way too much. Close all of the foreign bases and require strict adherence to the war powers act prior to deployment of troops on foreign soil.
Sadly, @59 has a point.
It would be a simple enough matter to create a top bracket that really did only include millionaires and above, but that would be anathema to conservatives. Reagan reduced the number of tax brackets from fifteen to four.
It’s another means by which high-earning professionals like doctors and lawyers are encouraged to see their self-interest aligned with those who make ten million dollars a year more than they do, rather than with those who make ten thousand dollars a year less.
@52 Pearl Harbor and the first WTC bombings beg to differ.
But yes, gov’t does provide services that no one wants to pay for, especially education, law enforcement, fire, disaster relief, infrastructure, defense, environmental protection, safety regulation, etc.
@ 60, that’s good to know. Too many people who generally agree with your points think there’s no upper limit to military spending and the “security” it supposedly brings.
I would cut the number of supercarrier groups we have in half. Last I checked (and it’s been a couple of years), but the US Navy has 12 such groups while all the rest of the world’s navies have a grand total of zero. Seems like a bit of overkill there.
@57
I never made any slippery slope argument; I merely stated that I could afford to pay more in taxes, and that the vast majority of people making over $250K could too. I see you do not disagree.
In any event, now we’re getting somewhere. So you do agree that government should provide some services, and those services need to paid for with taxes. Saying “it’s a matter of property rights” is therefore not a defense against the concept of taxes; merely a desire to pay fewer taxes. Which is fine; I assure you that I do not like seeing half of my income disappear each year!
Which brings us to my bolded question: How should those essential services be paid for? I’m of the opinion that income tax structure should be progressive, meaning that people at higher incomes should pay a greater percentage. I have a number of reasons for this opinion:
1. As a practical matter, I benefit more from government services than the guy making $15K and living in a bad neighborhood. The police come quicker to my calls, the schools are better, the roads are in better condition, etc.
2. I can more readily afford it. If I have to pay an additional 10% in taxes (say $25K), I’ll cut back on my overseas vacations, eat out less frequently, and wait a bit longer before buying a new car. If a person making $15K per year has to pay an additional 10% in taxes, they will likely have to make much more severe cuts to stay above water (and I say this as someone who distinctly remembers making less than $15K per year). And there will be 20 such people/families making those severe cuts instead of one of me making modest cuts.
3. Taking my money is less damaging on the economy. As I mentioned, I spend my extra cash on overseas vacations (which doesn’t help the U.S. economy), on nice restaurants, and on cars (which are very unlikely to be American-made). A guy making $25K spends his extra money on essentials like food and rent, and any vacations he takes are likely to be in the country. Which industries should we be stabilizing?
4. Many tax structures are already regressive anyway. As I mentioned, FICA caps just north of $100K per year, so I don’t pay that additional 6% tax on most of my income. Sales tax is horribly regressive due to poor people spending a greater percentage of their income than I do. And there’s still the capital gains tax’s absurdly low 15%, which is the tax bracket between $8.4K and $34K per year. Fix all those up (especially capital gains) and this reason vanishes, but until then it’s a compelling reason to raise income taxes on people making over $250K.
IMO, these are all excellent reasons for increasing my tax burden. I don’t like it, and I’d much rather keep my money and take that vacation to China that I’m planning, but I’m reasonable and socially conscious enough to be willing to give that up instead of taking money (or withholding services) that low-income people really need.
Now I’m guessing you want either a flat tax rate or worse yet, for each American to pay the same numerical amount in taxes. Please justify that without falling back on “property rights,” which you’ve already conceded are not a protection against taxes for essential services.
@63: Hawaii was not “U.S. soil” at the time it was bombed. It didn’t become a state until 1959.
Forgot about the first WTC bombing, though. For some reason I thought it was done by home-grown terrorists like Oklahoma City.
@57/65: Which isn’t to say there aren’t some really dumb federal programs we can cut, or that all the services the government provides are “essential.” Getting out of two (three?) foreign wars sounds like a good start to lowering some of our costs.
But the last time I crunched through the federal budget I just couldn’t see a way to pay down the massive deficit without raising taxes or cutting spending so much that we spiral into a Depression, and I’m willing to take one for the team. I’m certainly more able to do so than the poor. And if my “slightly above $250K” self can suck it up, why can’t the extremely rich?
@65
Actually, Before we can get to “How should those essential services be paid for?” we would need to agree which of those services are essential. I hold that those services are limited to the enumerated powers in Article 1 Section 8 of the constitution and that the Commerce and Elastic clauses have been badly abused to expand the government’s role far and beyond what is “essential”.
@68: Not sure how that’s relevant. We’re discussing percentages here, so the answer to my question on distribution remains the same whether the government spends the same as it currently does or whether its expenses go down to 10% of current amounts.
In other words: pretend there is no existing tax structure, and the government currently spends $X per year. How should the cost of $X be divided among citizens? Regressive, flat, progressive, other, etc.
@69 “What services” matters because it drives “how much revenue” is needed. But okay… I’ll play.
I would support eliminating all loop holes, refunds, credits and etc. and taxing every dollar earned over the median income level at a single flat % rate pegged to annualized government spending (all inclusive) such that when government spending goes up, the tax rate goes up and when government spending goes down the tax rate goes down and neither deficits nor surpluses are run up. Then everyone (except for the truly poor) have an amount of “skin in the game” and we all pay our bills together.
Also…
@52 & @66: Brush up on your history…
February 3rd, 1942: A Japanese Submarine shells the Ellwood oil production facilities near Santa Barbara.
June 21st- 22nd, 1942: A Japanese sub surfaces near the mouth of the Columbia River in Oregon and Washington and engages Fort Stevens.
September 9th, 1942: A Japanese Yukosuka E14Y Seaplane drops two bombs on an Oregon forest.
November 1944 – April 1945: Japan launches a series of “fire balloons” at the United States six people were killed, five of whom were children, near Bly, Oregon.
I’ve never worked for a wealthy person. Certainly I’ve had loads of bosses who would like to become wealthy some day, but never a “job creator”.
The even worse implication is that if the rich aren’t allowed to get much, much richer and stay that way, then we should expect them to invest in the country that in large part has made them rich. And somehow that’s supposed to be okay.
So what we really need is poorer working conditions, fewer regulations (which worked GREAT for the economy in 2008), weakened unions, and sacrifices from the middle class and poor in order for the rich “job creators” to deign to hire anyone in this country. Some patriots, they are.
68: You might pick and choose different government programs that can be eliminated, sure.
But you missed the point when you typed #70, so here’s another way to word IHSN’s question: Let’s pretend that we just now eliminated every single thing that you deem unnecessary or wasteful, and “taxes” have been lowered. Now that we’ve done that, we’re still back to the question of what our taxation system should be: are we paying these lower taxes in a progressive tax system, and did taxes lower for everyone after these cuts? Did we only cut programs so that we could adopt a flat tax system? If so, then what was in it for those whose taxes did not reduce? Given that their numbers are greater, why would the lower and middle class vote for a policy that would only turn out a benefit for the upper class?
At the end of the day, it’s a judgement call. Maybe in a perfect world, making 100 grand a year would be a simple matter of working twice as hard (or being twice as smart) as one making 50 grand per year, who works twice as hard (or is twice as smart) as a guy making 25 grand per year. In that world, you are only as poor as you deserve to be, and a flat tax is perfectly fair. In the real world, however, it’s not that simple. There are only so many jobs available that pay a decent wage. It’s becoming easier and easier to slip below that poverty line WITHOUT being as lazy or stupid as the libertarians would have you believe. More and more people with college educations are slipping below that line, as are more and more people who work above 40 hours per week. So we’re not exclusively talking about welfare for shiftless layabouts.
Besides, let’s pretend we do live in that perfect world, where only stupid, lazy, and all-around “bad” people become too poor to afford necessities (or too poor to ever retire). And let’s say that we therefore support cutting social programs in order to afford a tax cut for the upper x%. Why should “x” only be 2? If it’s all about deserving every bit of your income for being such a hard and intelligent worker, then surely there is more than a measly 2% of the population that qualifies for a tax break?
Also, a flat tax rate would be great if everyone’s expendable income were spent on luxuries. 85% of 250K could get more Ferraris than 85% of 15K (I’m using arbitrary tax rates here, for the sake of argument). The person making 15K just can’t buy any Ferraris. That’s fair: I fully support Ferraris being a luxury reserved for people who have worked hard enough to earn 250K per year.
What you ignore is the fact that, when a person makes 15K, that 15% is not cut from a Ferrari fund that they don’t deserve anyway. It’s cut from food, shelter, health care, and other bare necessities that are not, as mentioned earlier, affordable for everyone who “deserves” them. The 15% of 250K, however, only reduces cushioning that goes towards savings and luxuries, since necessities are paid for at well below 250K.
So, if my government requires “X” amount of dollars to provide necessary services (even if we limit it to those you approve of), why should I be just as willing to remove that from someone’s rent fund as I am to remove it from someone’s Ferrari fund? Why shouldn’t I differentiate between the two and remove more money from funds that would not otherwise go to necessities? If I believe that the rich deserve luxury, do I also have to believe that the poor deserve starvation or homelessness (rather than a simple lack of luxury)? If the poor have to starve or be homeless in order for the rich to afford these luxuries, which one do I choose?
Either way, I’m not being objective: to declare that rich people “deserve” their luxury more than poor people “deserve” necessities is a judgement call. To declare that a poor person’s housing is more important than a rich person’s European vacation is also a judgement call.
However, as income disparity continues to grow, and as unemployment and underemployment are higher than normal due to market forces, it seems a bit more difficult to defend the position that poor people are just the victims of their own laziness and incompetence. It’s also a judgement call to determine at what income a person begins to “deserve” these basic necessities: does it really coincide perfectly with the income at which a person can afford all necessities on their own? Because markets, wages, and prices fluctuate; often due to external forces. To judge whether or not a person deserves to live based on such highly fluctuating external forces is, itself, a subjective argument that you need to justify.
Quoth @70:
Hmm… this is an arguably more progressive scheme than currently exists. Under this proposal, exactly 50% of households would pay no tax at all (not just no income tax), and households just above the median income would not pay that much in tax either. And you’re apparently closing the capital gains tax exception, so people who make money through investing would pay as much as people who make money through wages.
I have a few concerns about implementation, e.g. how to handle withholdings when the entry point to the second tax bracket changes each year. And I’m concerned that wiping out all deductions might have some negative effects, e.g. the lack of 501(c)(3) status eliminating donations to charity. But I don’t think I’m philosophically opposed to a two-bracket system where the no-tax first bracket is, by definition, enough money for half of Americans to live on.
I don’t think tying taxes to expenses works, though. It the short run, there is still the deficit to pay down. But even in the long run, refusing to allow governments to build up debt when necessary could be devastating in recessions– that’s how we got the Great Depression in the first place. Further, eliminating borrowing during a war could result in a swift defeat. And by “war,” I mean a war declared by Congress, not unilateral presidential deployment.
Perhaps some form of “borrowing” authorization when risking economic or military collapse, coupled with a “repayment” scheme that pays everything off within 5-10 years…?
@70/73/74:
Hmm, maybe I’m misreading “taxing every dollar earned over the median income level at a single flat % rate.” I thought it meant “everyone making less than 50% of Americans pays no tax at all,” but @73’s comments and your own reference to “everyone (except for the truly poor) have an amount of ‘skin in the game'” makes me think I read the proposal incorrectly.
Obviously, my tentative approval is contingent on the no-tax bracket being set relatively high, around $45K to $50K by my estimates. If people at the $15K level are paying the flat tax rate, then I oppose the idea for reasons similar to what @73 said.
@73
“Did taxes lower for everyone after these cuts?” I propose taxing every dollar earned over the median income level at a single flat % rate pegged to annualized government spending (all inclusive) such that when government spending goes up, the tax rate goes up and when government spending goes down the tax rate goes down and neither deficits nor surpluses are run up. So yes, all tax payers enjoy the reduction in taxes (and suffer when they rise).
“Did we only cut programs so that we could adopt a flat tax system?” No need to make any cuts. My proposed structure is not predicated on them. (Though I think some cuts would be helpful).
“If so, then what was in it for those whose taxes did not reduce?” Everyone who pays taxes would see their taxes reduced (but never eliminated) IF spending is reduced under my proposed structure.
“If the poor have to starve or be homeless in order for the rich to afford these luxuries, which one do I choose?” False choice. No one is suggesting that we tax the poor, and you’re the only one that has suggested that we eliminate their “essential” services under this proposal.
My proposed tax structure’s intention is to spread the tax burden as wide and as thin as possible, and peg it to median income and government spending. I’ve never entered into debating who “deserves” what (and frankly can see no objective way to push through that territory) other than to say that everyone “deserves” to be able to earn a basic amount of income tax free and to “deserves” keep as much of the rest of what they earn as possible regardless of their class (I realize that’s a controversial opinion around here).
@53, I think I’m in love!
@55, how great is that. Thank you.
@@75
I mean real median income adjusted for inflation (for example, the 2003 Median Income of US households was $45,018 per annum). Use savings and cash reserves held by companies to calculate the taxable income for the purpose of setting the tax rate, and them tax corporate savings and cash reserves at the same rate.
I’ll give you the dispensation for war, but not other deficit spending. Government can still borrow money, but the cost of servicing, and retiring, that debt (over a defined minimum period), would be included as part of annualized government spending.
Payroll withholding starts when the Median is reached, and accrues at the prescribed percentage. No filing necessary (unless you have other sources of income).
@79: Ran some numbers, and I don’t see how your proposal is inconsistent with my suggestion that the government tax the wealthy more.
Let’s say the median income is $50K in 2011, because that’s a nice even number. I have no idea what the appropriate national tax rate would be, since we haven’t figured out which governmental services are essential and I don’t want to extensively crunch income distribution data, so I’ll leave that unspecified.
1. Everyone making $50K or less takes home every cent they make.
2. Anyone making $100K– a comfortable double what the median American makes– pays tax on half their income, so their effective tax rate is half the national tax rate. (Aside: 85% of American households make $100K or less.)
3. Anyone making $250K– the threshold for my suggestion– pays tax on 80% of their income, so their effective tax rate is (unsurprisingly) 80% of the national tax rate. (Aside: less than 2% of American households make $250K or more.)
4. A person making $1M pays 95% of the national tax rate.
5. Warren Buffet effectively pays 100% of the national tax rate.
So the poor pay nothing, the lower-middle class also pay nothing, and the upper-middle class pay roughly half the rate that Warren Buffet pays.
Doesn’t that accord with my suggestion that people who make more should bear a greater percentage of the tax burden? Especially since you’re closing off the various dodges and deductions the very rich use to drastically reduce their taxes…
@79/80: Some good summary statistics here:
http://www.census.gov/prod/2011pubs/p60-…
$50K was indeed the median income in 2010 (actually $49,445; it was $50,599 in 2009).
My figure on $100K families was dated; it’s now 80% of households make that amount or less.
I think I’m still right on the $250K figure, though I can’t find the exact percentage. $180K is the 95th percentile.
@79,@80,
Thank you both for your analysis. How do you view corporate taxes, I am lamentably ignorant.
Peace.
All for getting rid of tax deductions … also, go after the religious groups that get out of paying altogether, if they collect money they are a business. But … getting rid of deductions doesn’t create jobs anymore than offering them.
@80 … sad to say this, I fit into the poor that pay nothing. Yep, I pay no income taxes at all to anyone, I only pay sales tax. LOL Not proud of the fact that I make so little really, it’s just hard to get into a business that is being taken over by unions when you hate unions.
@80/81
The key element is indexing the bracket to median income (or some percentile there of) and indexing the rate to annualized spending as a % of taxable income. This means that when large entitlements are passed (or cut) tax payers are impacted almost immediately. It also takes the tax issue off the table as a direct and independent political issue.
Tip to readers: hiring a pool boy does not make you a job creator.
That’s not what my pool boy says.
Well, 70, that’s about the first flat tax proposal that I think has a reasonable basis. None of that whole rhetoric about how lots of people don’t pay taxes (even though they pay lots of taxes for FICA, sales taxes, etc.). It would be very complicated to implement effectively, but I know a few smart people who, given some time and resources (yes, we would have to dedicate some resources into this initially, but that’s not a bad thing), could figure it out. I agree that withholdings would be *more* difficult to calculate, but not that difficult. I’m actually in training right now for some fairly advanced computer analysis programming (I’m apparently at an intermediate level right now according to the software company’s people with just learn-as-you-go training, so this is actually “advanced”), and I think I could develop a program that easily accounted for monthly inflation numbers and government spending receipts and generated a withholding rule. However, that means the government would have to continue to employ people to calculate inflation and keep tabs on expenditures, and also invest in software to generate the results. It wouldn’t be super expensive (we already do much of this, the additional outlays would be very, very minimal…one programmer to keep the program working right and to run it monthly should be sufficient). It would also introduce some uncertainty into withholdings, which is a real problem for people at the margin now, but would be less of a problem if the first $47K of income or so were blanket tax-free. I mean, I dedicate a lot of resources to doing my taxes right now (my time…it takes a while), and chances are things wouldn’t change much under such a system as far as my outlays go, only in simplifying my taxes and giving me back 2 weekends in February.
Also, I’m not on board 100% with saying that employing a little domestic help qualifies you as a job creator, but it isn’t meaningless. It shouldn’t be tax-deductible, but I know that my housekeeper and the service people I employ regularly are happy to have my business. I employ more of them than most people because I travel for work and work a lot, so I don’t have a ton of time to deal with things I guess I *could* do myself, and my “sole proprietorship” is a rental property (which needs fixed, cleaned, and painted). Problem is, we’ve corporatized these things, too. When I was a kid, we had a housekeeper who came in once every few weeks and did the heavy cleaning, for a nominal fee. She was a high-school friend of my mom’s who cleaned houses while her kids were in school to improve the family budget. Additionally, our roofers and painters and carpet cleaners were independent to small business guys who kept most of the money they earned (less materials, their couple of employees, travel, etc.)…in fact, the guy who came and cleaned our walls once a year and painted them every 5 years was the housekeeper’s husband, and those two jobs together made them a pretty decent living (while the private elementary school I went to was actually pretty cheap, less than $2K a year for 2 kids, her kids were my classmates, and they had a perfectly acceptable home and cars). Nowadays, I utilize a small to medium business for each of these. It costs me more, and the people actually doing the work get to keep less of the money. And the only reason it’s even THAT good for the lower strata of the economy is that I make a point to hire small to medium businesses for these things, where most people would go with the much larger, cheaper business that pays their workers even less. I suppose I could employ independent contractors for these things, but I’ve had bad luck with their reliability. Our lawn guy, for example, suddenly disappeared. No one called and it was only after I called him after he didn’t show up to cut the grass for 2 weeks that his wife told me he had had a heart attack and was in the hospital. I truly felt bad for him, he seemed to be a decent, hard-working guy, but it would have been nice if he had designated someone to call his clients and let them know he wasn’t able to make his appointments if he were incapacitated. When I travel for work, I always have a dedicated person that my renter can call if they need something, should I not answer my cell phone (and most of the time I answer my cell phone if it’s them and eat the cost of the international call), and can handle making service appointments, has the keys to the unit, etc. if I call and say something needs done in the apartment.
@38- It’s still four times the median income. FOUR TIMES more than what most Americans make is “wealthy.” If they can’t afford a couple percentage points more income tax it’s because they’re fucking terrible with money.
I wonder if acknowledging the wealth gap compromises people pride in self. there is not a day that goes by when someone in the media/government mentions the wealth disparity, but it just really does not resonate. Rural U.S. has virtually no concept of what mega wealth really is. I think it impinges their pride to feel that someone so very far away has that much influence and control over their standard of living and even personal freedoms. Acknowledging wealth disparity, compromises your pride by acknowledging you have been a victim at some point, as well as a victim to a great invisible hand.
Anyone could own a shitty dilapidated rural town in the U.S. with a few million in the bank and a few greased palms. It just takes a special kind of miscreant to want to do it. It takes a REAL special person to feel of themselves as “job creators” for hiring help and running a shitty restaurant that is the “cultural” center of their dilapidated rural town.