Trump acting as President

[Hohn]

^^^ that makes me sick.

also why I HATE the comments of "this is a tax cut for the rich!"

if 40% of filers earn money through the IRS, how can you possibly cut their taxes that they don't pay?

This is why I think of "starve the beast" as such an epic fail. The Republican obsession with tax cuts-- which, since you can't cut the taxes of those who don't pay-- has led us to a massive wealth transfer mechanism hidden in the tax code.

Indeed, the tax code is the primary means of welfare distribution. And with millions of Americans on the dole, but not THINKING they are on the dole, this is particularly nefarious. It's one thing to get a welfare check or EBT card. That's very clearly in everyone's mind a welfare check. But when you get a "refund" that's thousands of dollars more than you could have ever had in liability? Well, that's not welfare-- that's just getting your own money back, right?

The political appeal of this is precisely why it is so dangerous.

 

[GodFearinGunTotin]

^^^ that makes me sick.

also why I HATE the comments of "this is a tax cut for the rich!"

if 40% of filers earn money through the IRS, how can you possibly cut their taxes that they don't pay?

Everybody ought to pay their fair share. But this will never go away.

 

[BugI02]

At least not until it collapses under its own weight

 

[Twangbanger]

Doc, not sure if you mean how many people have income *from* tax filing (i.e., net beneficiary from tax filing) or if you mean the total number of earners *on* tax day?

I have data for both, but it's somewhat old as looked into this at a time when only 2010 was current data.

The bottom two quintile of filters (40%) have net negative effective tax rates, mostly by virtue of "refundable credits."

It's easy to see how this happens:

Charts are from the Tax Foundation.

This is what makes me shake my head at the legacy of people like Jack Kemp in the Republican Party. They were so eager to be "Compassionate Conservatives." But they had no idea what kind of beast they were dealing with...both the nature of the government itself, and the people who allow it.

 

[hoosierdoc]

Everybody ought to pay their fair share. But this will never go away.

honestly I'm OK with a certain percentage not paying anything. But they can't not pay and then be used as an excuse for why I should pay more. Tax relief can only happen to those burdened by it.

 

[GodFearinGunTotin]

At least not until it collapses under its own weight

There's plenty of wealth out there they'll liquidate (at least that which can't be off-shored) before they let it collapse.

 

[GodFearinGunTotin]

honestly I'm OK with a certain percentage not paying anything. But they can't not pay and then be used as an excuse for why I should pay more. Tax relief can only happen to those burdened by it.

That percentage ought to be very, very, low though.

 

[jamil]

That percentage ought to be very, very, low though.

I have relatives who have a 12 year old boy still in diapers. He has a vocabulary of maybe 20 words. He was born with birth defects. It's doubtful he could ever live on his own or earn a living. It's a financial drain on their family. They get some federal assistance. Personally I'd rather help those families through private organizations rather than government. But as a compromise, I could be persuaded to having a safety net for people who can't earn a living for themselves. It seems reasonable to narrow the safety net to that level. It's ridiculous to think that families who earn 45K need to take the wealth of others. That is simply immoral.

 

[GodFearinGunTotin]

I have relatives who have a 12 year old boy still in diapers. He has a vocabulary of maybe 20 words. He was born with birth defects. It's doubtful he could ever live on his own or earn a living. It's a financial drain on their family. They get some federal assistance. Personally I'd rather help those families through private organizations rather than government. But as a compromise, I could be persuaded to having a safety net for people who can't earn a living for themselves. It seems reasonable to narrow the safety net to that level. It's ridiculous to think that families who earn 45K need to take the wealth of others. That is simply immoral.

That would certainly be better than where we are.

 

[BugI02]

There's plenty of wealth out there they'll liquidate (at least that which can't be off-shored) before they let it collapse.

You and I can both start to worry if, for instance, you see FedGov wishing to restrict private ownership of gold again. I think that would be a necessary prelude to what you speak of; as it is a hedgeing technique available to the 'little guy', who will be the primary target of such barbering

 

[hoosierdoc]

I have relatives who have a 12 year old boy still in diapers. He has a vocabulary of maybe 20 words. He was born with birth defects. It's doubtful he could ever live on his own or earn a living. It's a financial drain on their family. They get some federal assistance. Personally I'd rather help those families through private organizations rather than government. But as a compromise, I could be persuaded to having a safety net for people who can't earn a living for themselves. It seems reasonable to narrow the safety net to that level. It's ridiculous to think that families who earn 45K need to take the wealth of others. That is simply immoral.

there are programs that will pay family members to care for people in that situation. It's actually a realization that families will provide better loving care for someone with those handicaps than a facility will. And it will be WAAAAY cheaper to have the person in a home rather than in a facility. But, the person can't work AND take care of the person, so they are paid to be a caregiver to their loved one. Great solution.

 

[BugI02]

There will still be precious stones, though (nod to Dr Szell)

 

[Hohn]

That percentage ought to be very, very, low though.

Agreed. It is VERY dangerous to have a non-trivial proportion of the people being net subsidized by a larger proportion. If you think about all the people that are truly disabled and absolutely unable to do any work at all, it is really, really small. Probably less than a million people in the entire country out of those who are <65 and rightfully considered "working age."

I'd prefer not to have any progressively in the tax rates, and I think the best taxation scheme for society is a flat national sales tax that has no exceptions. It's the simple idea that those who consume more and spend more will pay more in tax. Spending--not earning-- is the best indicator of how highly someone is living.

If someone is working their tail off but living frugally, we shouldn't punish them by taxing them just for working hard. A tax on consumption puts incentives were they should be. So that mom working 2 jobs full time to pay for some schooling and take care of her kids won't have extra taxation just because of the higher income.

I think the FairTax is the best proposal out there yet devised.

I hate the phrase "fair share" because "fair" is inherently arbitrary. To a Democrat 'fair share' is limitless.


The real evil of our tax code is not just the progressivity, it's the complexity. A complex code requires a massive IRS bureaucracy to administer, what with all the arcane rules and 501s and you name it.

All the IRS employee are contributing NOTHING of truly economic value. Their pay and benefit is a loss to the entire economy. So getting rid of these people moves them from net-economic-loss jobs into net-economic-gain jobs--- really anything of value is much more economically useful.

And what we really want is having, as much as possible, everyone contributing economically valuable output. That means something that, in a free market, someone else is willing to pay for.

A properly sized federal government would be about half the size of JUST the DOD, and that's including all federal employees worldwide. We have to keep this in mind, from an Overton window sort of view. That way when they carp about "radical" cuts, you can counter with the fact that a proper federal government is about 5% of GDP, and since we're spending 5x that amount, WHO THEN is the radical?

 

[Twangbanger]

...I think the best taxation scheme for society is a flat national sales tax that has no exceptions. It's the simple idea that those who consume more and spend more will pay more in tax. Spending--not earning-- is the best indicator of how highly someone is living. If someone is working their tail off but living frugally, we shouldn't punish them by taxing them just for working hard. A tax on consumption puts incentives were they should be...

I guess I just dislike the whole idea of taxes being used as a tool to incentivize and/or punish, period. From the way you describe it, it sounds like you just want to substitute your preferred set of incentivized behaviors, targeted in the tax code, for someone else's. I would prefer we keep the issue of "incentives" out of the matter altogether, and just stick to the most basic, primary purpose of taxation: to fund the government. Once we start playing philosopher-king and talking about incentivizing anything, I think we're heading back down the slippery slope to hell.

 

[Hohn]

Is there a way of taxing something that does not disincentivize that thing?

I'm not aware of any.

Taxing consumption is preferable because 1) it doesn't distinguish between what is consumed, so it is not "picking winners and losers", and 2) it avoids taxing production.

 

[Twangbanger]

Is there a way of taxing something that does not disincentivize that thing? I'm not aware of any...

I'm not aware of any, either. It's just that you posited what the incentives "should be." What is the moral basis for that assertion?

...Taxing consumption is preferable because 1) it doesn't distinguish between what is consumed, so it is not "picking winners and losers", and 2) it avoids taxing production.

I'm not sure I follow this statement. You state (paraphrasing): "Taxing consumption does not pick winners and losers, because it doesn't distinguish between what is consumed." But that statement can be applied equivalently to income taxation: "Taxing production does not pick winners and losers, because it doesn't distinguish between what is produced."

Now, are you saying that people make different levels of income, therefore, taxing income creates winners and losers in proportion to how much one makes?

Then you're right back into the same logical problem: because since people also consume differing amounts, taxing consumption also picks winners and losers in proportion to how much one consumes.

Is your position that Production is morally superior to consumption? Production and consumption are just different sides of economic exchange. With the exception of people who produce nothing, we are all both producers, and consumers. As long as both acts are entered into voluntarily, without making uncompensated claim on the labor of another, they simply comprise different sides of a moral economic transaction. Why is it self-evident to you that one side of that voluntary transaction ought to be targeted for disincentivization by taxation, but the other, not?

 

[Hohn]

I take no position on the moral value of consumption vs production. But I think that economically, production is clearly more desirable.

Production can always be traded at some point for consumption. But the nature of consumption is that it destroys the thing consumed.

So, economically speaking, a loan to buy a tractor (for use in production) and a loan to buy Cheetohs are not equivalent, and even of it was $10k worth of tractor and $10k worth of Cheetohs borrowed by the same person with same ability to repay and such.

The tractor is "good debt' because it is not only collateral that defrays the risk of the debt, but it is ultimately going to be used to produce more value than it costs. Over its lifetime, $10k worth of tractor will produce $20k or $50k or much more worth of production. Arguably, it can reproduce itself, because it can generate enough economic output to buy another tractor.

What will the $10k worth of Cheetohs produce? Momentary happiness, some bloating and aggravated diabetic tendencies, and that's about it.


The determining factor is ultimately whether you feel that supply or demand is the more powerful, relevant economic factor. If you believe supply is the greater, you would prefer taxing demand, and vice versa. So which is greater?

I made my case in this blog posting.

 

[1DOWN4UP]

Eyeing the wall: Trump team surveys Texas for building spots - Houston Chronicle