Compromise on Bush Tax Cuts

[Pangloss]

Isn't it Democrats who are arguing that the President's stimulus package stopped things from being worse? Why do Democrats get to use that reasoning but not Republicans?

It's not the same argument. Government spending ≠ tax cuts

 

You yourself have made the argument that tax cuts have a direct impact on the bottom line (spending), increasing the deficit. So absolutely it's the same argument.

 

 

Of course, the whole thing could be a sham. It's politics. It wouldn't be the first time spurious arguments were used to support an action, when the real agenda was different. People don't want their taxes raised, so they claim it will hurt businesses and cost jobs. But since I still don't see an answer to the question of how $3,000 creates/costs a job, I'm leaning toward smokescreen.

 

If you mean in terms of small businesses not wanting to let on to a reporter what their real problems are, and just picking an easy target by blaming it on taxes, I might agree with that. But small business is a fickle beast and not part of the tail-wags-dog-wags-tail political scene, so any larger sort of "smokescreen" theory is probably not valid in the 200-250k range.

 

With that stipulation this is a valid point, IMO, but there's reality and then there's perception. If that's the perception, then raising taxes will fly directly in the fact of that perception, and then it'll be a problem whether that makes sense or not.

 

The only thing you can really do is raise taxes and then give the small businesses people some other kind of incentive to expand. Some such are included in the current plan, I believe, such as deductions for equipment investments.

 

 

The Republicans want to make the rich richer so they argue for tax cuts for the wealthy to stimulate job growth and economic development. The Democrats want to help the poor and the middle class so they argue for more government stimulus programs which benefit lower income earners.

 

Or Republicans want to make sure everyone has a chance to get rich, and Democrats just want to bash the evil wealthy and could care less about the middle class.

 

Or maybe Democrats really do want to help the poor, and Republicans really do want to make sure everyone has a chance to get rich. And the middle class is on its own. This is what I believe.

 

 

But if you look at history, giving huge amounts of government money to the poor and the middle class via the GI Bill in the post-World War II period, which allowed people who otherwise would never have owned homes or gone to university to experience greater prosperity, produced one of the greatest economic booms in American history at the same time as it promoted social justice by helping those less well off.

 

Yup, great program.

 

Doesn't mean that a general social income redistribution is a good idea.

 

 

In contrast, all the Bush tax cuts did was produce the greatest downturn in the economy since the 1929 market crash.

 

Prove it.

 

 

The only way you can explain this is to recognize that this is pure class warfare

 

I disagree.

[lemur]

You can always get some economic stimulus and some job creation by directing more money via the tax structure to the rich to invest and create jobs or to the poor and the middle class to increase demand for products and thus also create jobs. Which end of the wealth spectrum you choose to stimulate with additional money to create jobs depends on where you want the most money to stick on the first pass through as it moves from the government and tax structure to the private economy. The Republicans want to make the rich richer so they argue for tax cuts for the wealthy to stimulate job growth and economic development. The Democrats want to help the poor and the middle class so they argue for more government stimulus programs which benefit lower income earners.

 

But if you look at history, giving huge amounts of government money to the poor and the middle class via the GI Bill in the post-World War II period, which allowed people who otherwise would never have owned homes or gone to university to experience greater prosperity, produced one of the greatest economic booms in American history at the same time as it promoted social justice by helping those less well off. In contrast, all the Bush tax cuts did was produce the greatest downturn in the economy since the 1929 market crash. Naturally, the only sensible solution to get us out of that downturn and generate more jobs is to continue the program which created the problem in the first place.

 

The only way you can explain this is to recognize that this is pure class warfare, with all the arguments about tax cuts stimulating the economy and creating jobs -- entirely disproved by the failure of the Bush tax cuts to produce anything other than a huge recession -- merely serving as a smokescreen to cover the Republican's protection of the economic interests of the wealthy, their political clients.

 

You have all the right data here but your conclusions are one short, imo. You say yourself that government stimulus to the poor and middle-class produces economic boom. Now, how do you think the prosperity of that boom gets distributed? Do you think the boom decreases or increases the gap between rich and poor? Imo, the gap ends up increasing due to economic boom/growth and, as a result, social-economic culture leaves more people behind as many compete to keep up with the expanding costs of achieving/maintaining middle-class status.

 

Now, if you look at the net effect of tax cuts, as you note about the Bush 'recession,' they tend to slow down growth and cause people to conserve/budget their spending. This, in turn, stimulates people to make due with less consumption and prosperity which effectively reduces the gap between rich, middle-class, and poor. This is, imo, the only way to reduce this gap because growth always leads to increasing stratification.

 

If you really wanted to eliminate stratification, you would strive to get back to the pre-Keynesian social-economic model where it was the job of the rich and middle-class to save their wealth and live meagerly to show that they did not take it for granted. This resulted in a very meager economy and cautious consumption, which meant that the rich, middle-class, and poor were all suffering to make due with as little as they could. I think that's the closest you can ever get to social-economic equality - but maybe someone else has another vision where everyone can live it up and achieve middle-class status. I don't think it's possible for various reasons, but I'd be interested to debate it.

[jackson33]

swansont; It's not specifically any one item that might increase cost per employee, rather the total of items if the BTC's are not extended AND the potential effects of other legislation still not resolved. Even then there are countless business/INVESTORS concerned with where the Federal Government might be headed 2-5-10 years down the road, via regulation or actual involvement in the private sector. I could go on into the general economic environment in the US or most of Europe where economies in general are on threatened with inflation and instability of their Governments.

 

Thread; "Compromise on the BTC's - Is Obama moving back to the middle"

 

First; Obama IMO is campaigning for the 2012 election and has never, not been. I believe HE thinks, it's possible to be re-elected, with another Democratically Controlled Congress, then completing his "Social Justice Agenda". Frankly, the little bitty strangest in me, tells me he might well accomplish his re-election, but not with the Congressional majorities he has enjoyed, one in three shot. Yes that's low.

 

Second; Since, there are some and enough to stop any action this session (Senate), that believe a "Lame Duck Congress" is no time to legislate major policy, I don't think the "2011 Tax Increases", will be decided other than as Obama presented them. The 55B$ ADD ON's, SO FAR pretty well kills any chance of passing. By the way, does anybody know if the 2% decrease, for one year on incomes to 105K$, includes the employers contribution, which I understand is to equal the employees contribution or the millions of self employed will also get a 4% reduction?

 

Third; The excuse being used by Congress is basically over the Estate Taxes "Death Taxes, swansont" which directly hits on every member of Congress (constituents), small business and perceived fairness exist in all economic areas. While 35% on Estates over 5M$, seems fair to some, I don't think many people understand how that 5M$ estate value is achieved and this will involve the exact same people the old system had. The truly rich folks have hundreds of ways to escape the paying this tax, via any number of the various trust funds or simply move outside the US. hurt are the small business people, the farmers, mom and pops, that have no idea what have.

 

Forth; The US is facing a terrible 2011 Deficit IMO and unavoidable whatever actions Republican's claim they can take to prevent. First there is no indication they will even try, second we have no 2011 Budget to make estimates from and most important the House Committee Chairmanships are ALL from the old guard and the House starts any spending (budget) legislation.

 

Fifth and no body seems to address this issue; Many States are in very bad shape and will NEVER improve, California has a shot, but NY, IL, MIch, NJ, Mass and other States have little change of gaining new business or maintaining a tax payer base for many reasons, taxes, obligations and an ageing population the most dominating. Even if they all started to barrow (changed mandatory limitation of a balanced budget) to maintain those obligation, as California learned last week, NO ONE will buy their bonds. The Federal IMO will undoubtedly try to bail out a couple for awhile, but as the ageing infrastructure declines and those obligation increase and the Federal own problems increase (regardless who is in charge) a point of no return will....another thread.

 

Summery; While I have to now favor continuation of the BTC, it should have been addressed 1/21/2010 or before (business/consumer confidence), while the economy was showing signs of improvement, it will cost about another trillion over a TWO YEAR PERIOD, taking the GROSS US National Debt over 100% GDP (my guess in this FY, 2011).

[Mr Skeptic]

You yourself have made the argument that tax cuts have a direct impact on the bottom line (spending), increasing the deficit. So absolutely it's the same argument.

 

Yes, borrowing money and handing it with zero interest to the richest Americans is indeed a form of spending, but not really the same type as what most people think of when they say government spending. Now I'm sure some people will argue that borrowing money and giving it away to rich people is good for the economy, but if compared to other government projects that doesn't seem very convincing. Like other government spending, borrowing money and giving to rich people increases the deficit.

 

(They're not tax cuts, they are tax postponement and a tax increase, which people call "tax cuts" to make it more popular. To cut taxes, they'd have to cut spending or increase GDP more than enough to pay for the cost of borrowing the money to hand out to the people.)

[Pangloss]

Former President Clinton signed on to the deal today.

 

http://www.msnbc.msn.com/id/40610620/ns/politics-white_house/

 

"Both sides are going to have to eat some things they don't like," Clinton told reporters. "We don't want to slip back into a recession. We've got to keep this thing going and accelerate its pace. I think this is the best available option."

[Mr Skeptic]

You have all the right data here but your conclusions are one short, imo. You say yourself that government stimulus to the poor and middle-class produces economic boom. Now, how do you think the prosperity of that boom gets distributed? Do you think the boom decreases or increases the gap between rich and poor? Imo, the gap ends up increasing due to economic boom/growth and, as a result, social-economic culture leaves more people behind as many compete to keep up with the expanding costs of achieving/maintaining middle-class status.

 

Now, if you look at the net effect of tax cuts, as you note about the Bush 'recession,' they tend to slow down growth and cause people to conserve/budget their spending. This, in turn, stimulates people to make due with less consumption and prosperity which effectively reduces the gap between rich, middle-class, and poor. This is, imo, the only way to reduce this gap because growth always leads to increasing stratification.

 

If you really wanted to eliminate stratification, you would strive to get back to the pre-Keynesian social-economic model where it was the job of the rich and middle-class to save their wealth and live meagerly to show that they did not take it for granted. This resulted in a very meager economy and cautious consumption, which meant that the rich, middle-class, and poor were all suffering to make due with as little as they could. I think that's the closest you can ever get to social-economic equality - but maybe someone else has another vision where everyone can live it up and achieve middle-class status. I don't think it's possible for various reasons, but I'd be interested to debate it.

 

If what you describe is accurate, then you can both increase the prosperity of everyone including the rich, and decrease the gap between the rich and the poor, by taxing the rich and giving money to the poor. The money trickles up to the rich, we tax them and give it back to the poor, and watch our economy grow as it trickles up again. So long as this process is continuous the gap will remain small. That is after all the whole idea of redistributing externalities, if the rich get richer and the poor get poorer as a consequence of giving money to the poor, then taking money from the rich and giving it to the poor to counter the effect is perfectly fair.

 

If the government can improve the whole economy but add unfairness, then by improving the economy and taxing/subsidizing away the unfairness makes it both fair and better for everyone.

[swansont]

You yourself have made the argument that tax cuts have a direct impact on the bottom line (spending), increasing the deficit. So absolutely it's the same argument.

 

 

You were talking about the effect on the recession, not the deficit. Where have I said that tax cuts and spending have the same economic impact?

[ParanoiA]

Yes, borrowing money and handing it with zero interest to the richest Americans is indeed a form of spending, but not really the same type as what most people think of when they say government spending. Now I'm sure some people will argue that borrowing money and giving it away to rich people is good for the economy, but if compared to other government projects that doesn't seem very convincing. Like other government spending, borrowing money and giving to rich people increases the deficit.

 

(They're not tax cuts, they are tax postponement and a tax increase, which people call "tax cuts" to make it more popular. To cut taxes, they'd have to cut spending or increase GDP more than enough to pay for the cost of borrowing the money to hand out to the people.)

 

That's an odd bit of logic. So, if the tax rate is X amount one year, then X-Y the second year, then -Y is borrowing money and handing to rich Americans with zero interest? (I won't even argue the problem with the moving target of X and how every year is just comparison with the previous. I also won't bother with the X+Y state theft implications using your same logic.)

 

So a reduction in confiscation of private property by the state (or in this case, no change in confiscation at all since there is no "cut") is now a form of "giving" by the state back to the citizen? Seriously?

 

That would appear to make Rush Limbaugh absolutely correct about his assessment of progressive taxation policy and the popular view of our manifest tyrannical majority currently on the rise here: that everything you keep is a gift from your fair masters.

 

Your logic seems to imply this equation: 100% - Tax rate = money government has lost and given to you.

 

And yes, I do understand the spending/tax rate relationship. But to call it handing money to rich people when you're *not* willing to cut spending is the logic of politicians - a propaganda trick to externalize the government's problem and make it about "rich people". Tax cuts to the rich minority, or the middle class majority are reductions in state confiscation of private property - not lost government revenue. Spending money assymetrical with said tax cuts is the fault of the politicians and legislators. Allowing them to characterize reductions in theft as "handing money to rich people" is allowing them to conflate their problem with addition and subtraction.

[Mr Skeptic]

Paranoia, now compare how accurate my description is when you consider that when we cut taxes we don't cut spending but instead borrow to keep spending the same. Which means those taxes still need to be paid, therefore it can't be a tax cut as a tax cut would reduce taxes. That's why I'm calling it spending. Maybe you could call it tax postponement. But tax cut it is not.

 

As for it being leaving the rate the same, the rate (for now of course) will be reduced from what it was planned to be. If you have a 10 year budget and you change the spending on one item to be the same as the previous year, you've changed the budget even if someone comparing the individual yearly budgets might think otherwise. But a budget planned ahead of time is still a budget, even if it didn't happen yet and changing the plan is changing the budget.

[lemur]

If what you describe is accurate, then you can both increase the prosperity of everyone including the rich, and decrease the gap between the rich and the poor, by taxing the rich and giving money to the poor. The money trickles up to the rich, we tax them and give it back to the poor, and watch our economy grow as it trickles up again. So long as this process is continuous the gap will remain small. That is after all the whole idea of redistributing externalities, if the rich get richer and the poor get poorer as a consequence of giving money to the poor, then taking money from the rich and giving it to the poor to counter the effect is perfectly fair.

 

If the government can improve the whole economy but add unfairness, then by improving the economy and taxing/subsidizing away the unfairness makes it both fair and better for everyone.

So basically you're saying that if I make, say, houses then I should build a house and sell it and then give the money to someone else so they can pay me to build a house for them, so that I can give that money to somebody else so I can build another house for them, etc.? Why can't they just build their own houses? Why keep redistributing money to pay other people to do things for you when you could distribute the knowledge and resource-access for people to do things for themselves?

 

 

 

Your logic seems to imply this equation: 100% - Tax rate = money government has lost and given to you.

I'm sorry to say, but as pro-republic as I am, I disagree with the party-republican perspective that the money they make is theirs when the entire economy is running on bailouts, stimulus, and other government subsidies. If republicans want to come up with methods for privatizing ownership and economic rights, I am interested in those. But don't pretend like the money that's currently circulating is anything except fake money printed to prevent rich and middle-class people and businesses from having to declare bankruptcy. It's easy to complain about stimulus and bailout money after you're in the clear financially, but if it hadn't been there would you have been able to even keep your shirt? As I say, I'm against permanently indenturing people to the government for bailing them out, but I think that if you want to give freedom back to the people, you should at least make sure that everyone gets de-indentured from everyone else. This should be the goal of republican governance, not allowing some people to keep indenturing others.

[Marat]

One way to improve social justice regardless of how the structure of taxes, deficit, and government expenditure is designed (and to answer Lemur's problem) would be just to do in the U.S. what most European states have done and cut the length of the average work week from 40 hours to 35 or 32 hours. The length of the work week has fallen historically with every improvement in productivity, going from 72 hours to 40 hours from 1880 to 1940, but has failed to fall with improvements in productivity since then. By cutting the work week, the available jobs would be 'redistributed' so that fuller employment could be achieved, at the cost of each person earning less, thus promoting social equality.

[ParanoiA]

Paranoia, now compare how accurate my description is when you consider that when we cut taxes we don't cut spending but instead borrow to keep spending the same. Which means those taxes still need to be paid, therefore it can't be a tax cut as a tax cut would reduce taxes. That's why I'm calling it spending. Maybe you could call it tax postponement. But tax cut it is not.

 

 

Ok, then by this reasoning a decrease in spending with an increase in taxes would be considered more spending? Of course not. They are separate acts that don't depend on each other for their own definition.

 

If I drive west slower than the earth rotates to the east, I still drove west. That I'm displaced further east is a summary of analysis - an inferred exercise by a subject to describe the net effect of my driving and rotation of the earth - not an actual description of my behavior, nor of the earth's behavior. In other words, your mind is doing the simplification in order to analyze the net effect of behaviors.

 

It's one thing to thevenize the tax, spending, and budget balance relationship to characterize the summarized behavior of the system. It's quite another when you allow that analysis technique to redefine the specifics of the system. Ie..suddenly now, only rich people are handed money simply because theirs is the tax rate we're looking at right now, when we do the tax math. Since we're only talking about a change in their rate, at this moment, we get to make believe it's only them getting to keep more of what they earn at the expense of the budget.

 

That's cherry picking your villians. To be consistent with your tax cut/increase spending logic you'd have to blame all tax payers for being handed money, in every tax bracket - especially the lowest ones, which is the poor and lower middle class.

 

 

If we ignored the class status....

 

Group A = 10% taxes.

Group B = 25% taxes.

Group C = 35% taxes.

 

Without the social justice bias, and using your tax/spend logic above, we would say that Group A is being handed the most money. Group C being handed the least.

 

Then someone proposes to lower taxes for group C, by 5%, giving them a 30% tax rate. Who, except for a politician, would then say that group C is the one being handed money by the government? No, the rate of ALL groups being "handed money" merely takes a small step toward equitable distribution.

 

It's only when you conflate this tax rate reality that you can then engage in disingenuous logic campaigns and pretend as if a tax cut for all groups, instead of just two socially acceptable groups, is somehow "handing money" to just that third non-socially acceptable group.

 

I'm sorry to say, but as pro-republic as I am, I disagree with the party-republican perspective that the money they make is theirs when the entire economy is running on bailouts, stimulus, and other government subsidies.

 

Did you just lump everyone in the country as a republican? Because I'm not sure how bail-out money, stimulus and government sudsidies suddenly makes my money not mine anymore?

 

Money is private property that belongs to the people. Government confiscates this property to fund their operations. The government doesn't *have* any money of its own, only the people's money. So when they inject all of this spending, they're doing it with the people's money - money they confiscated through taxes.

 

But don't pretend like the money that's currently circulating is anything except fake money printed to prevent rich and middle-class people and businesses from having to declare bankruptcy. It's easy to complain about stimulus and bailout money after you're in the clear financially, but if it hadn't been there would you have been able to even keep your shirt? As I say, I'm against permanently indenturing people to the government for bailing them out, but I think that if you want to give freedom back to the people, you should at least make sure that everyone gets de-indentured from everyone else. This should be the goal of republican governance, not allowing some people to keep indenturing others.

 

No pretense here, I'm not a republican, and I'm proud not to be. I was not for the bailouts, stimulus, none of it. Now our markets have learned nothing from the terrible decisions that got us here. And, of course, we're still using the bank fraud model to generate false credit.

 

As they said on 'Lost'...this has all happened before, and will happen again.

Edited December 11, 2010 by ParanoiA

[Mr Skeptic]

Ok, then by this reasoning a decrease in spending with an increase in taxes would be considered more spending? Of course not. They are separate acts that don't depend on each other for their own definition.

 

Basically, what I'm saying is ignore the "tax rate" and focus on spending. The money our government spends, we the people will have to pay -- via taxation. If they lower the "tax rate", does that mean we will pay less taxes? Nope, whatever the government spends is what we will pay. That we pay more of it now or later is important of course, but it is the spending that will have to be paid for. So for your example, I would consider that lowering taxes coupled with pre-emptive taxation. That is, since spending is lowered we pay less taxes, since tax rate is increased we pay more of those taxes now.

 

That's cherry picking your villians. To be consistent with your tax cut/increase spending logic you'd have to blame all tax payers for being handed money, in every tax bracket - especially the lowest ones, which is the poor and lower middle class.

 

 

If we ignored the class status....

 

Group A = 10% taxes.

Group B = 25% taxes.

Group C = 35% taxes.

 

Without the social justice bias, and using your tax/spend logic above, we would say that Group A is being handed the most money. Group C being handed the least.

 

Then someone proposes to lower taxes for group C, by 5%, giving them a 30% tax rate. Who, except for a politician, would then say that group C is the one being handed money by the government? No, the rate of ALL groups being "handed money" merely takes a small step toward equitable distribution.

 

Well, I don't look at it from a social justice perspective, but rather from one of trying to make our system more like a free market, which I think requires progressive taxation. That might seem strange to you, so I'll explain briefly. On average, rich people get to be rich by exploiting other people, that is, by acquiring wealth made by other people, usually by trading something of less value in exchange for something of more value, and never by creating even a fraction of that wealth themselves. I just don't see anything someone could do that would be worth 1 billion dollars, for example, not without other people. In the idealized free market, there is perfect competition, so that profit margins are near-negligible, which among other things means negligible exploitation. In the real world, people get paid significantly less than the wealth they generate, their boss takes a cut from that, and people do this anyways because of the convenience and lack of better job offers (ie, non-free-market conditions). In practice, we can't really do much to ensure trades are perfectly equitable, but we can easily tax people who are making a ton of money extra, which on average would move the system closer to the free market ideal.

 

Now, what you are describing is a change in a progressive taxation system. The effect of the change you are describing is to lower the tax burden of one class, ie that class pays less taxes than before. However, the reality of the situation is that the change is exactly the same as the government borrowing money from (eg china) and giving it to that class. There on the budget is the item, change from previous budget to borrow more money so rich people have to pay less taxes. On a budget, spending more and earning less have exactly the same effect on the deficit.

 

Perhaps an example of how I see charging less as pretty much equivalent to giving money. Suppose at the store you buy something that was $10 and 50% off, you pay your bill and walk away. Now suppose that the cashier forgot to factor in your discount, you go back and you demand your money. Now, did you pay more and get some money given to you, or did you get charged less? If you're keeping a budget, what will you write down on it as the amount you spent and your income? Did you spend $10 and earn $5, or did you spend $5?

 

It's only when you conflate this tax rate reality that you can then engage in disingenuous logic campaigns and pretend as if a tax cut for all groups, instead of just two socially acceptable groups, is somehow "handing money" to just that third non-socially acceptable group.

 

I'm not sure what you're talking about here. In your example only one group's tax burden was changed.

[lemur]

Did you just lump everyone in the country as a republican? Because I'm not sure how bail-out money, stimulus and government sudsidies suddenly makes my money not mine anymore?

If a bank lends out your savings as mortgages and the mortgages default, you lose your savings. You can maybe take the property in lieu of your money, but your money is gone. The previous owner of the house got it when they sold it to the person who borrowed the money from you(r bank). Now, let's assume the banks wouldn't have gotten bailed out and they went bankrupt. Your savings deposits would be gone. The only reason they're not is because the government backed them up. Now, let's say the bank bankruptcies had occurred and stimulated a chain reaction of credit-defaults to every employer. Then everyone's wages would have gotten frozen, causing further defaults on bill-payments, discretionary-spending, etc. So the fact that the government intervened basically provided the economy with the money to avoid chain-reaction bankruptcy. I.e. without the government spending, you would be bankrupt at this moment. So how is your money yours?

 

Money is private property that belongs to the people. Government confiscates this property to fund their operations. The government doesn't *have* any money of its own, only the people's money. So when they inject all of this spending, they're doing it with the people's money - money they confiscated through taxes.

Reading this makes me wish the government had done nothing. That way people would see exactly what they would have following total collapse.

 

No pretense here, I'm not a republican, and I'm proud not to be. I was not for the bailouts, stimulus, none of it. Now our markets have learned nothing from the terrible decisions that got us here. And, of course, we're still using the bank fraud model to generate false credit.

The good thing about the bailouts was that it prevented people from exploiting the instability to get rich quick at others' expense. If banks would have sold foreclosed properties for pennies on the dollar, people would have bought up loads of properties and behaved like medieval kings (provided they could afford the tax bill). The point is that things would have gone much differently without the government intervention, so it's really inappropriate for people to claim the right to keep what they earned as if it was earned in a totally free market. What needs to be done is to figure out a set of rules to ensure the free market stays free by, for example, ensuring that everyone is able to keep a homestead that they can't lose due to taxes or foreclosure. In other words, if the government bails out the rich/middle-class then it should also fix the game to give the poor freedom of choice in whether to play into economic exploitation or not. In fact, everyone should have the choice because freedom means not being compelled against your will to participate in someone else's enterprise.

[Pangloss]

You were talking about the effect on the recession, not the deficit. Where have I said that tax cuts and spending have the same economic impact?

 

I'm not going to help you move the goalposts.

 

Democrats arguing that stimulus spending, a massive, broad-based weapon in macro economics, has "prevented things from being worse" is very much like Republicans arguing that tax cuts, a massive, broad-based weapon in macro economics, stimulate the economy.

 

 

One way to improve social justice regardless of...

 

I'm not convinced "social justice" needs to be improved. I think that's the left's version of the "war on Christmas".

 

 

One way to improve social justice regardless of how the structure of taxes, deficit, and government expenditure is designed (and to answer Lemur's problem) would be just to do in the U.S. what most European states have done and cut the length of the average work week from 40 hours to 35 or 32 hours. The length of the work week has fallen historically with every improvement in productivity, going from 72 hours to 40 hours from 1880 to 1940, but has failed to fall with improvements in productivity since then. By cutting the work week, the available jobs would be 'redistributed' so that fuller employment could be achieved, at the cost of each person earning less, thus promoting social equality.

 

Or maybe not. I bet China would love it if we did that. So would India.

 

But I have to say I'm not a real big fan of how your answer to the need for equality is to have everyone earn less.

[swansont]

I'm not going to help you move the goalposts.

 

I'm not. I was pointing out where they had been placed.

 

Democrats arguing that stimulus spending, a massive, broad-based weapon in macro economics, has "prevented things from being worse" is very much like Republicans arguing that tax cuts, a massive, broad-based weapon in macro economics, stimulate the economy.

 

 

Yes, I understand that this is your position. I'm saying that they do not have an equal basis for the arguments. Tax cuts do not have the same effect that spending does.

[lemur]

Yes, I understand that this is your position. I'm saying that they do not have an equal basis for the arguments. Tax cuts do not have the same effect that spending does.

If so, do you understand what the reason would be? I.e. basically you're saying that mandatory spending is more effective than voluntary spending at creating revenues. You might as well send police around to escort people into stores and force them to make purchases at gun-point. I understand the perspective that human welfare is more important than absolute protection of private property; HOWEVER I don't understand why it is necessary to use monetary/fiscal governance to ensure economic welfare. Why not leave the free market free and use some other means to provide people with opportunities to sustain themselves when GDP-growth, revenues, jobs, etc. are waning. By using fiscal stimulus to create jobs and revenues, you are basically just propping up a dying system by integrating more people into it, which creates that much more pressure for it not to do what it is prone to do anyway, i.e. fail.

 

Since that last sentence sounds extremely pessimistic, let me qualify it by saying that the "dying system" is not the same thing as total economic collapse. There are actually a multitude of economic systems occurring globally and the US nation does not have only one economic system either. In fact, each business has its own system, which is constituted out of numerous sub-systems derived from external sources. The problem is how to empower the various businesses to manage, negotiate, and restructure their sub-systems in a way that increases their viability without contributing to cost-inflexibility that is sustaining recession. This should allow them to survive without fiscal stimulus money circulating but also help other businesses to do so by lowering their prices and costs.

 

Then, of course, something needs to be done about unemployment because without any income or utility, people are unhappy and expend all their energy searching for an employer instead of employing themselves. Ideally, existing jobs should have their work-week hours cut to create more jobs, but many people would take a second job, defeating the purpose. Maybe there is some way to create incentives to limiting hours spent on wage-labor employment. That way, people would have their basic expenses covered and be able to spend their unemployed time on other pursuits than pouring money and resources into seeking employment.

Edited December 12, 2010 by lemur

[swansont]

If so, do you understand what the reason would be? I.e. basically you're saying that mandatory spending is more effective than voluntary spending at creating revenues. You might as well send police around to escort people into stores and force them to make purchases at gun-point.

 

The discussion is about government spending, so I don't view this as anything more than a convenient straw man and appeal to ridicule.

[pioneer]

Taxes are very similar to the school bully who shakes down the smaller kids at school for their lunch. The little boy works to make his P&J sandwich, he puts in some cookies, a small bag of chips and an apple. As he enters the school yard, the big bully kid takes his lunch bag (able to use force if needed), steals his chips, apples and cookies but leave him the P&J sandwich. If he gives back the apple, is the bully being generous? Maybe in some abstract way the bully is being generous by giving the boy's apple back to the boy.

 

Say this happens every day. Since the boy is held hostage, he may develop the Stockholm syndrome, where it begins to relate to the bully who pillages his lunch. Now getting the apple back is a big treat, with the bully so generous.

 

The bully is this scenario is not alone, but has a gang that he feeds. None of this gang will prepare their own lunch, but they all depend on the bully for their free lunch. If the bully was to give back the apple to the boy from which he took it, they may feel that they got short changed with their fair share given away. The gang may be hungry and dependent on other kids to pack lunches so they can feed. They may ask the bully not to give the apple back.

 

Say the principle decides to help the little kids and looks out for them, so the bully gang can not take their lunch. Now the small boy has his entire lunch. The bully and his gang are hungry, but it never dawns on them to get up early and pack their own lunch through fund raising. They are so used to taking what they need. The little boy who is not used to so much food to eat, finds that he now has cookies, chips an an apple ,beyond the P&J sandwich he has gotten used to. Since the Stockholm syndrome will take time to dissipate, he will feel affinity for the bully and give him some cookies.

Edited December 12, 2010 by pioneer

[lemur]

The discussion is about government spending, so I don't view this as anything more than a convenient straw man and appeal to ridicule.

I don't see what is strawmanning about it. If government is about providing certain services and using taxation to evenly distribute the burden to the public, that could be viewed as a reasonable method of preventing costs for public goods/services from falling disproportionately on the people who take the initiative to invest in something non-private. However, when the point of government spending is to stimulate economic growth by increasing spending, it is nothing more than mandatory spending; i.e. not fair compensation for a reasonably-priced service from the lowest bidder, etc.

 

So it really does basically amount to saying, "one way or another you are going to devote a certain amount of your budget to injecting fiscal stimulus by paying it to other people. If you don't do it voluntarily, we'll help you do it by mandate." Is the right of private individuals to manage their own spending conservatively a target for elimination? Should people be no longer allowed to save their money because that money is needed for someone else to pay off their debt? Personally, if it was me I would not want to default on my debts and declare bankruptcy either, but wouldn't it make more sense for the government to mitigate the relationship between the debtors and creditors instead of spreading around money to artificially stimulate opportunities to "earn" the money to pay to the creditors and then billing people for the stimulus through taxation?

 

Taxes are very similar to the school bully who shakes down the smaller kids at school for their lunch. The little boy works to make his P&J sandwich, he puts in some cookies, a small bag of chips and an apple. As he enters the school yard, the big bully kid takes his lunch bag (able to use force if needed), steals his chips, apples and cookies but leave him the P&J sandwich. If he gives back the apple, is the bully being generous? Maybe in some abstract way the bully is being generous by giving the boy's apple back to the boy.

 

Say this happens every day. Since the boy is held hostage, he may develop the Stockholm syndrome, where it begins to relate to the bully who pillages his lunch. Now getting the apple back is a big treat, with the bully so generous.

 

The bully is this scenario is not alone, but has a gang that he feeds. None of this gang will prepare their own lunch, but they all depend on the bully for their free lunch. If the bully was to give back the apple to the boy from which he took it, they may feel that they got short changed with their fair share given away. The gang may be hungry and dependent on other kids to pack lunches so they can feed. They may ask the bully not to give the apple back.

 

Say the principle decides to help the little kids and looks out for them, so the bully gang can not take their lunch. Now the small boy has his entire lunch. The bully and his gang are hungry, but it never dawns on them to get up early and pack their own lunch through fund raising. They are so used to taking what they need. The little boy who is not used to so much food to eat, finds that he now has cookies, chips an an apple ,beyond the P&J sandwich he has gotten used to. Since the Stockholm syndrome will take time to dissipate, he will feel affinity for the bully and give him some cookies.

 

 

Good post, but what do you do when the schoolboy's father, who packs his lunch, turns out to be getting the food for his lunch from the bully too?

 

 

[swansont]

I don't put much stock in the "taxation is robbery" angle. The US constitution gives the power to congress to lay and collect taxes. The taxes they collect do not belong to the individual. Equating it to a shakedown by a bully is another appeal to ridicule, and any conclusion one draws based on that is flawed.

[jackson33]

I don't put much stock in the "taxation is robbery" angle. The US constitution gives the power to congress to lay and collect taxes. The taxes they collect do not belong to the individual. Equating it to a shakedown by a bully is another appeal to ridicule, and any conclusion one draws based on that is flawed.[/Quote]

 

 

swansont; Maybe, but in those days the Federal Taxed imports or used targeted sources for an income. Lincoln as I recall first taxed all income to finance the Civil War, was declared unconstitutional and later an amendment was introduced and ratified to give us our current system. Technically then, it is now Constitutional.

 

Under the robbery scenario, taking money from those that have to provide for those that don't, for whatever reason could be said, is robbery. The Federal was set up to provide equally to all States, according to their population and did so, for the most part until the early 20th century...

 

"The taxes they collect do not belong to the individual." How could this be??? If not collected do they simply vanish??? All earned money belongs to the person who earned it, who in turn can provide for his/her family, voluntarily pay the hundreds of taxes or go to jail. Maybe extortion would be a better word!!!

[Pangloss]

An ABC News/Washington Post poll out Monday shows almost 70% public support for the tax plan.

 

Even when primary objections to the pact are mentioned - that it would add about $900 billion to the federal budget deficit and that it extends tax breaks to the wealthy - 62 percent of all those polled support the package.

 

The poll also shows majority support for extending the tax cuts to wealthy Americans as well as the middle class, though it follows partisan lines:

 

Some 54 percent of all Americans support an extension of the Bush-era tax cuts for all taxpayers, including wealthy people and the middle class. It's this provision that generates the biggest partisan gap: 85 percent of Republicans say these tax cuts should be continued for all taxpayers; 38 percent of Democrats (31 percent of liberal Democrats) agree. Among independents, 49 percent back the full extension; 46 percent oppose it.

 

It also illustrates the give-and-take nature of bipartisan politics. I thought this quote was interesting:

 

A slender 11 percent of those polled back all four of the deal's primary tax provisions: an across-the-board extension of Bush-era tax cuts, additional jobless benefits, a payroll tax holiday and a $5 million threshold for inheritance taxes. Just 38 percent support even two of the components.

 

http://www.washingtonpost.com/wp-dyn/content/article/2010/12/13/AR2010121302373.html?hpid=topnews

[ParanoiA]

Well, I don't look at it from a social justice perspective, but rather from one of trying to make our system more like a free market, which I think requires progressive taxation. That might seem strange to you, so I'll explain briefly. On average, rich people get to be rich by exploiting other people, that is, by acquiring wealth made by other people, usually by trading something of less value in exchange for something of more value, and never by creating even a fraction of that wealth themselves. I just don't see anything someone could do that would be worth 1 billion dollars, for example, not without other people. In the idealized free market, there is perfect competition, so that profit margins are near-negligible, which among other things means negligible exploitation. In the real world, people get paid significantly less than the wealth they generate, their boss takes a cut from that, and people do this anyways because of the convenience and lack of better job offers (ie, non-free-market conditions). In practice, we can't really do much to ensure trades are perfectly equitable, but we can easily tax people who are making a ton of money extra, which on average would move the system closer to the free market ideal.

 

Your logic here appears to only include wealth creators as a free market ideal. And that people who make money by trade, not wealth creation, are exploiting the wealth creators - and even if you don't mean this as a value judgment, it's wrong.

 

We've had this conversation before, and I reject your ideal because you haven't yet accounted for the value in consolidation and redistribution. Wealth creators find it hard to trade their wealth when 99.9% of the world is out of their practical reach. It's retailers, the people who create ZERO wealth, yet gather and distribute this wealth via their retail, even corporate, model. While this is not wealth created from the dirt of the earth, it is immeasurably valuable to wealth creators and our entire standard of living, and any good economic performance is dependent on it. They are contributing to the market just as wealth creators are. You call this exchanging something less of value, for something more of value - that's because you forgot the value the retailer ADDED to the wealth created.

 

Now, what you are describing is a change in a progressive taxation system. The effect of the change you are describing is to lower the tax burden of one class, ie that class pays less taxes than before. However, the reality of the situation is that the change is exactly the same as the government borrowing money from (eg china) and giving it to that class. There on the budget is the item, change from previous budget to borrow more money so rich people have to pay less taxes. On a budget, spending more and earning less have exactly the same effect on the deficit.

 

Yes, that's the problem. When we are narrowly looking at the "change" in taxation, it enables statements like "we're handing rich people 700 billion dollars from the rest of the taxpayers", without any reference to the billions being handed to the poor, the middle class, and etc. When we look at the whole system, that statement stands out for its disingenuous, and unfinished conclusion - instead, "we're handing poor people and middle class folks less money than before while the rich still get handed the least". You have to purposely choose a narrow, strategic point to analyze in order to make that statement.

 

The rich still pay more taxes, and at a higher tax rate, and get handed the least amount of money by a spend happy government. The poor still pay the least in taxes, and a much lower rate, and get handed the most amount of money by a spending government.

 

Only social value judgments enable a majority to deny equality to a minority like that. Hello, gay marriage. Hello, the rich. We love to bash our minorities with subjective exception logic while we shake our heads reading our history books about our ancestors doing the same.

 

Perhaps an example of how I see charging less as pretty much equivalent to giving money. Suppose at the store you buy something that was $10 and 50% off, you pay your bill and walk away. Now suppose that the cashier forgot to factor in your discount, you go back and you demand your money. Now, did you pay more and get some money given to you, or did you get charged less? If you're keeping a budget, what will you write down on it as the amount you spent and your income? Did you spend $10 and earn $5, or did you spend $5?

 

Easy. What I write down is my analysis of the events that I care about - spending 5 dollars. That's because what I write down is dictated by the system I'm analyzing. I don't care about how many blue things I bought, so I don't write that down. I don't care about how much I spent before taxes, so I don't write that down. Instead, I write down the total of how much money I spend or made because my interest is narrowly fixed on that. And I don't, then, pretend as if I didn't go to the store twice, paying more the first time.

 

Now, did I go spend 5 dollars? Or did I spend 10 and receive 5 dollars back later? You're still conflating arbitrary points of analysis with real behavior and responsibility.

 

That the rich now get to keep 700 billion dollars says nothing about how much every other tax class is getting. That's just a summary of analysis of the "change" in taxation, without any consideration for the whole damn system. It's politics.

 

If the poor were paying 35% in taxes, and the rich were paying 20%, and someone lobbied to reduce tax on the poor to 30%, I hardly believe you'd hear that characterized as "billions of dollars being handed to the poor". Suddenly, everyone's analysis skills would include the whole system. Somehow, none of my arguments above would be necessary.

Edited December 15, 2010 by ParanoiA

[Mr Skeptic]

Your logic here appears to only include wealth creators as a free market ideal. And that people who make money by trade, not wealth creation, are exploiting the wealth creators - and even if you don't mean this as a value judgment, it's wrong.

 

We've had this conversation before, and I reject your ideal because you haven't yet accounted for the value in consolidation and redistribution. Wealth creators find it hard to trade their wealth when 99.9% of the world is out of their practical reach. It's retailers, the people who create ZERO wealth, yet gather and distribute this wealth via their retail, even corporate, model. While this is not wealth created from the dirt of the earth, it is immeasurably valuable to wealth creators and our entire standard of living, and any good economic performance is dependent on it. They are contributing to the market just as wealth creators are. You call this exchanging something less of value, for something more of value - that's because you forgot the value the retailer ADDED to the wealth created.

 

My understanding is that the ideal free market condition of perfect competition applies to everyone, not just people creating wealth but also to people trading. Ie, would you sell to a store that gives you more, or one that gives you less? Would you buy from a store that charges less or one that charges more? In the free market, the profit margins of employers and traders will tend toward zero just as with everyone else. What I did do is point out that due to the apparent limitations of wealth creation, those who make a lot of money are almost necessarily making that from trading/employing, and in an ideal free market they would make hardly anything just like everyone else. Sure, their job is important but so is everyone else's. I see progressive taxation as a (clumsy) method of somewhat countering the imperfect competition of the real market.

 

As for what to consider the change in taxation, as a change it is what it is. But to judge whether it is good or bad depends on a value judgment and consideration of the current distribution, whether people consider it fair or not already.