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February 26, 2009

Comments

IWS - I'm not seeing anything in your argument that shows that rich people are unable to pay for the spending. You seem to be supporting the argument that the proposed tax rates won't cover the spending.

As to the fairness thing, I'd ask this: you stated that 9% of filers payed 62% of income taxes. What percent of the income did those filers make?

An interesting Government Insurance Factoid:

If you are a part time Army Reserve or National Guard soldier, you can purchase insurance through Tricare. This is a new program about a year or so old. Last year, for a family insurance program, the cost was $255.00 per month.

This year, after figuring out the real cost, the price is 181.00 per month (for a family of any size). I assume that the total cost is much higher, but that the program was funded with a set percentage of subsidy, thus lowering the cost to the soldier after new data.

Tricare is the replacement for CHAMPUS, for any older vets out there.

So, a nice new benefit for soldiers, and perhaps an area to study effectiveness of a wider governmental involvement in healthcare that includes a wider economic demographic than medicare and medicaid.


IOW, it assumes that the correct theory of morality is utilitarianism, and act utilitarianism at that. And in so doing, rules out any serious consideration of "rights" as constraints on action.

Just once, I'd like to see some recognition by liberals that act utilitarianism being the one, true theory of morality is NOT a given.

Bingo! Progressive tax policy can be construed as "fair" within a particular choice from amongst the variety of moral frameworks available to us. Now we can have a constructive conversation about the merits of competing frameworks, rather than just shouting "fair!", "not fair!" at each other.

And yes, david kilmer is correct - I used the term "frame" in that sense.

"That same 9% of filers paid 62.35% of all income taxes in 2006. I'm afraid I don't understand what definition of "fair" is being used.

Those numbers don't mean much without saying what percentage of all income those filers earned."

Good point. That 9% of filers, who paid 62.35% of all income taxes, accounted for approximately 50% of the income. I didn't mean to suggest that the top 9% should only pay 9% of income taxes - obviously, they should account for more, since they have higher income.

What's it countering?

It's countering the idea that having more money than other people indicates that you're a godlike being who deserves all you have and got it all on your own by your personal virtue, and therefore that any attempt to require you to pay more than other people for the upkeep of our society is punishing you, motivated by jealousy, and the equivalent of the Holocaust.

I was specifically harking back to an earlier discussion of the estate tax in which I referred to Warren Buffett's views on the matter (though I misremembered Somalia rather than Bangladesh). But no doubt Buffett is also spouting obvious irrelevancies and is best ignored.

Catsy: I know you're hardly a wild-eyed liberal, but I'd like you to spend some time thinking through the logical implications of the line of reasoning that led you to your position on universal health care. See whether and how it applies to other services and safety nets, and the need for them. I'd honestly be surprised if you hadn't had thoughts along that line before, but I'd be interested to hear where they led you.

Oh, no good could come of that… ;)

Seriously though – I’m not against services or safety nets, I’m not someone who thinks they should pay no taxes at all. I’ve used food stamps in the past and I ate plenty of WIC cheese growing up. I’ve needed those services myself so I’m not against them. Seeing a need for them, I have to agree that they have to be funded somehow…

But I also think that throwing more $ at a problem is not always the answer. I prefer to focus initially on reducing waste and overhead. If you do that first, and make the process transparent so I can really see that you did your best – then when you tell me you still need more money for the program I’ll be less likely to resist. But we don’t tend to do that much…

It's countering the idea that having more money than other people indicates that you're a godlike being who deserves all you have and got it all on your own by your personal virtue, and therefore that any attempt to require you to pay more than other people for the upkeep of our society is punishing you, motivated by jealousy, and the equivalent of the Holocaust.

Cool. Who's making that argument?

Maybe there's something I don't get about this argument, if you can even call it an argument, but it doesn't seem to actually make a point. If the point is that we're fortunate to be where we are, WHO IS ARGUING COUNTER TO THAT?

Slarti,

The point being made is that the great financial success achieved by people in stable, functioning societies is (largely) not possible outside those societies. The more success one has, the more one has benefited from the framework in which one realized that success. It's not some moralization over being or not being a goat-herder. It's just a way of illustrating that people don't build success in a vacuum, that they've benifited greatly from the rule of law and, dare I say, governement regulatory structures. How many wealthy people in the US got to be wealthy without the corporation or a banking system or record-keeping bureaucracies or the stock market or courts or police protection or a highway system or my dirty underwear. (Oh, wait, scratch that last one.)

So tax wise were returning to the horrifying Clinton years with a top marginal rate around 39%. I didn't vote for him first time around but the Clinton era was probably the best period economically outside the Eisenhower/Kennedy era that I have experienced in my lifetime. Frankly I don't think the top 15% who are going to be paying the higher rates topping out at this figure could give a damn provided the economy gets moving again and there is a consequent improvement in asset values.

Although plenty of people come by wealth in societies that are not functioning as well...pirates and drug cartels to name two potential career paths where you make it on your own merit, despite the lack of infrastructure and effective social controls.

despite the lack of infrastructure and effective social controls

Because of, I'd suggest.

Maybe there's something I don't get about this argument, if you can even call it an argument, but it doesn't seem to actually make a point. If the point is that we're fortunate to be where we are, WHO IS ARGUING COUNTER TO THAT?

The point is this Slartibartfast. Why is a progressive tax structure licit? It's because the riches possessed by the rich were not created, John Gault-like, by their own efforts alone.

As usual our friend from ABQ nails the point. If happiness is log(money), then a progressive tax system is a flat tax system.

This is a *great* way of putting it. I'd add "where money < some large number". Above a certain amount, happiness plateaus.

Slarti,

That is true. I bet the heads of the drug cartels get brought down to size by suggesting that they only managed to procure their wealth because they weren't born in America, where the infrastructure would not have provided such an opportunity.

Maybe there's something I don't get about this argument, if you can even call it an argument, but it doesn't seem to actually make a point. If the point is that we're fortunate to be where we are, WHO IS ARGUING COUNTER TO THAT?

I am also not sure why you seem to be unclear on what is a relatively straightforward point. The issue, contrary to your summary, is not that we are fortunate to be where we are. At least, that is not the key issue. It is that wealth is not created in a vacuum. When one makes arguments about what counts as class warfare and "eating the rich" based upon the notion that their personal wealth is being unfairly burdened by taxation, it is sometimes helpful to complicate this point by making it clear that their ability to accumulate the wealth they are so proud of depends a great deal on that same taxation.

How much is too much? How little is too little? Well that's really the meat of the debate isn't it? But when one writes a long personal anecdote that seems to laments the raiding of their wealth and ascribes all of that wealth to their own personal heroism, it seems entirely reasonable to me to point out that there is a great deal more to the question of how to construct a tax policy then how one feels about their own little pile of money.

I think that utilitarianism, act- or otherwise, is wrong. I have thought so ever since my first intro ethics course.

Out of sheer curiosity - and with a promise not to derail the thread further - what could possibly be in an intro to ethics course to put you off utilitarianism so completely?

Why is anyone still engaging DDD?

I'm not engaging the troll: I'm mocking it. In verse.

It's because the riches possessed by the rich were not created, John Gault-like, by their own efforts alone.

Anyone who can create wealth from nothing without any help at all is a magician and has my admiration. I don't think any of us are claiming, though, that they've done any such thing.

I don't think any of us are claiming, though, that they've done any such thing.

AAAHHHHHHH!!!

(slams head on desk, repeatedly)

Although plenty of people come by wealth in societies that are not functioning as well...pirates and drug cartels to name two potential career paths where you make it on your own merit, despite the lack of infrastructure and effective social controls.

Then again, these people don't get end up with a higher marginal tax rate. They get shot.

Anyone who can create wealth from nothing without any help at all is a magician and has my admiration. I don't think any of us are claiming, though, that they've done any such thing.

That's fine. But does that mean that there's no point to this?

When one makes arguments about what counts as class warfare and "eating the rich" based upon the notion that their personal wealth is being unfairly burdened by taxation, it is sometimes helpful to complicate this point by making it clear that their ability to accumulate the wealth they are so proud of depends a great deal on that same taxation.


How much is too much? How little is too little? Well that's really the meat of the debate isn't it?

BINGO!

So, this is really a discussion about fairness, and not so much an abstract discussion of some quantitively undefineable debt to society and species?

Great. We can talk about fairness, even though fairness is subjective. We can even talk about how yes, in order to live and do business in the United States, you have certain tax obligations under the law, and no amount of griping is going to change that those tax laws exist. It's a choice, living here; a particularly easy choice if you have the money to choose to live elsewhere.

But the you-have-it-better-than-a-Nigerian-goatherder kinds of discussions don't lead anywhere. Which is fine, if you think you're trying to shut down a troll, but I think the best approach to that is not reply in the first place.

Or maybe I'm still not getting it. It wouldn't be the first time.

Slart, do you perhaps have cleek's pie filter installed so that you're getting a d'd'd'dave-free version of the thread?

it is sometimes helpful to complicate this point by making it clear that their ability to accumulate the wealth they are so proud of depends a great deal on that same taxation

Ah: your taxes are protecting you from the ravening masses. Well, those taxes are also protecting the ravening masses from you, in a way that a Somali goatherder's aren't.

I'd also suggest that higher marginal tax rates may not particularly enhance dave's ability to make a profit. This is about taxes in the margins, no? Or do you see dave's objection to be something like all taxes are theft?

the you-have-it-better-than-a-Nigerian-goatherder kinds of discussions don't lead anywhere.

Well, do you believe tht progressive taxation is legitimate? If so, then I'm not arguing with you. If not, then explain how the rich, who beefit from living in our society to a greater degree than most, ought not to pay a larger share of the expenses of that society.

Well, do you believe tht progressive taxation is legitimate?

Sure. The question is fairness, though, isn't it? And fairness is at the root of dave's objections, as far as I can see.

If not, then explain how the rich, who beefit from living in our society to a greater degree than most, ought not to pay a larger share of the expenses of that society.

The rich pay a larger share even if taxes are flat. The only way everyone pays the same share is if taxes are fixed-sum, which isn't on the agenda of any organized group that I'm aware of.

So, this is really a discussion about fairness, and not so much an abstract discussion of some quantitively undefineable debt to society and species?

Among other things. It's more a discussion about what works, in a reasonably fair way. When responding to someone claiming that something is unfair, should the response be "too bad" or more like "here's why it's not terribly unfair"?

Ah: your taxes are protecting you from the ravening masses.

Not exactly. Your taxes support a system in which you can operate with some degree of predictability, benefit from existing infrastructure and institutions, and with reduced risk. It's not just a moat around a castle. It's bedrock on which the castle sits.

"IWS - I'm not seeing anything in your argument that shows that rich people are unable to pay for the spending. You seem to be supporting the argument that the proposed tax rates won't cover the spending.

As to the fairness thing, I'd ask this: you stated that 9% of filers payed 62% of income taxes. What percent of the income did those filers make?"

To answer your second point first, I answered in another post, but they accounted for approximately 50% of taxable income.

To your first point: I stand corrected. They can pay for the spending. I don't believe that the proposed tax rates and 'deduction reduction' will generate the required funds, though.

That said, I haven't had time to do more than skim highlights of the proposed budget and at this time find myself without hard numbers upon which to base an argument. I'm off to WhiteHouse.gov to start digging through the proposed 2010 budget now.

Great. We can talk about fairness, even though fairness is subjective. We can even talk about how yes, in order to live and do business in the United States, you have certain tax obligations under the law, and no amount of griping is going to change that those tax laws exist. It's a choice, living here; a particularly easy choice if you have the money to choose to live elsewhere.

Oy! The choice is not about where to live. That is not the point of the examples that people are raising. I feel silly rephrasing this over and over but you still seem to be missing the mark. The choice is not about where to live or about whether to gripe about taxes or not. The choice is about whether one properly understands the purpose and effect of tax policy on the very concept of wealth.

This conversation is not difficult to trace Slartibartfast:

4d made some comments suggesting that Obama's rhetoric on taxation was akin to Nazism and eat the rich type rhetoric. He then followed up, as he is wont to do, with a long personal anecdote, that was meant to convey that his wonderful efforts to make life better for everyone with all the wealth he has worked so hard to achieve were being complicated by this sort of class warfare. KCinDc pointed out as many others have to 4d with little success or even acknowledgement, that contrary to what he seems to believe, his wealth would likely not even exist except in a society that was structured around similar tax policy. You replied that that was irrelevant. It wasn't.

The point that you seem to keep missing is not that we have it better than a Nigerian goatherder. I have no opinion on whether "we" do or not and what I would guess is that goatherders in general exist within a tax regime that is just as "fair" as ours. The point is that discussions of "fairness" need to acknowledge that the discussion involves a lot more than who has more or less money. It needs to acknowledge that there is a correlation between the potential for wealth and the degree to which we fund that society in which that wealth exists. 4d seems consistently oblivious to this point and thus others continually feel the need to remind him.

I'd also suggest that higher marginal tax rates may not particularly enhance dave's ability to make a profit. This is about taxes in the margins, no? Or do you see dave's objection to be something like all taxes are theft?

I don't know whether a higher marginal tax rate will help dave or not and that is precisely the point. His anecdote only serves to highlight his own narrow view of his particular pile of money and elides the question of how tax policy might effect that wealth in any larger economic context.

Based on 2004 tax rates (I have not redone this since then):

When you include Social Security taxes to income, doesn't it make it so some lower income people pay a higher marginal tax rate than higher income people? For example, if someone is self employed (but really anybody because whether the employer pays half for you or you pay it is still your money in my opinion) and making exactly the maximum taxable income for Social Security ($87,900), I think he pays a higher rate than someone making taxable income of $250,000. Doesn't this argue for removing the cap on Social Security taxes or at least ensuring that the progressive tax system covers at least as much as the combined rate of payroll taxes? Wouldn't that be more "fair?"

Rough Math:

Income tax schedule:

$0 to $14,300: 10% of the amount over $0
$14,300 to $58,100: $1,430.00 plus 15% of the amount over 14,300
$58,100 to $117,250: $8,000.00 plus 25% of the amount over 58,100
$117,250 to $178,650: $22,787.50 plus 28% of the amount over 117,250
$178,650 to $319,100: $39,979.50 plus 33% of the amount over 178,650
$319,100 to no limit: $86,328.00 plus 35% of the amount over 319,100

$87,900 taxable income
Income tax = 8,000 + 25%(87900-58100) < 7,450> = 15450
+ Social Security tax 12.4%(87,900) = 10899.6
15450+10899.6
= $26349.6 = Total taxes equals 30% of $87,900

Tax rate is 25% from 87,900 to 117, 250. = 7337.5 + 26349.6 = 33687.1 = 28.7 % rate on $117,250.
Tax rate is 28% from 117,250 to $178,650 = 17192 + 33697.1= 50889.1 = 28.5% rate on $178,650.
Tax Rate is 33% from 178,650 to 319,100 = 46348.5 + 50889.1 = 97237.6 = 30.5% rate on $319,100.

$250,000 23545.5+ 50889.1= 74434.6 = 29.7% of $250,000
$275,000 31795.5 + 50889.1 = 82684.6 = 30.06% of $275,000

So it appears to me that someone making up to $250,000 taxable dollars a year is paying a lower percentage of income taxes than someone making $87,900 taxable dollars per year. Again, the rates have changed since 2004, but I suspect there is still a sweet spot of income where your overall rate is lower with a higher income than the current cap on SS taxes.

Especially since I believe that many people against a progressive tax also think that social security is unsustainable and the social security taxes are essentially a general fund tax anyway.

Not to mention that capital gains certainly ought to cover the same rate as income.

I think you're not hearing me, brent. I completely get the argument. What I don't see is why you think it's relevant. dave is objecting to tax increases, not taxation. He might object to all taxation, but I don't think he's said as much.

Ah: your taxes are protecting you from the ravening masses. Well, those taxes are also protecting the ravening masses from you, in a way that a Somali goatherder's aren't.

hairshirthedonist already put it pretty clearly but I would simply add that it ought to be fairly obvious that a society that is structured and subsidized by government in the way that ours is is not just about protection from violence.

dave is objecting to tax increases, not taxation.

Yes, but he's objecting specifically to a proposed tax increase on the wealthy (by some definition). That's why it's relevant to discuss how one gets to be wealthy in the first place. Why would he have to be opposed to taxes in general for that to be relevant?

dave is objecting to tax increases, not taxation. He might object to all taxation, but I don't think he's said as much.

The point, Slartibartfast, is the reasons that he gives for objecting to those tax increases. Try it this way: If I were to make the opposite argument that the tax rate was too low because I have too much extra income at the end of the month and that I believe that my discretionary income would be much better spent on some specific public project. Would you be incorrect if you pointed out that there are communist societies where a similar type of economic structure is in place and that there are many advantages to the type of "excess" income we have here as opposed to those types of societies? Or would that be irrelevant?

Why would he have to be opposed to taxes in general for that to be relevant?

On the one hand, we have dave objecting to going from 35% to 40% bracket, and on the other hand we have some of you suggesting that dave has some so-far unspecified thanks to pay to society just for it being there for him, and that he should just stop complaining.

Which isn't a bad suggestion, but it sort of gives dave the argumentative advantage in that he's got at least expressed some opinion on where his threshold of unfair lies.

dave ought to be more grateful. Groovy. How much more grateful ought dave to be?

I suspect society would grind to a Soviet-like halt if employees in general only did as much as they had to, to avoid getting fired.

I think there are a lot of heroes out there.

Thank you.

dave ought to be more grateful. Groovy. How much more grateful ought dave to be?

About 5 percent, give or take, for that portion of his blessings that about 95% of the population of this country doesn't share.

I don't think gratitude is the issue. From my point of view, I'm simply trying to point out why a more progressive tax structure is not as unfair as dave seems to think. Why is that so complicated? I guess we could simply talk numbers, elimating the need for qualitive characterizations of taxation schemes, but we'd have to provide analyses of lots of data for it to mean anything, if it really would mean anything in any case. (I'd like to propose a smooth curve with a continuous first derivative for tax rate versus income. I don't like the quantized brackets.)

How much more grateful ought dave to be?

Well, I thought that the system worked real well back during the Eisenhowever administration.

Good lord, now even Daniel Larison is acknowledging that income inequality is problem:

However, it is important to bear in mind that some significant part of this build-up of debt was not simply profligacy, but seemed to be necessary for many households to make up for stagnating incomes that were becoming increasingly inadequate during the housing bubble. That bubble was fueled by the absurdly low rates that the Fed kept so artificially low, but I have yet to see very many movement conservatives questioning their traditional adoration for Greenspan and his works. Of course, there have always been principled exceptions to the cult. As we all know, income stagnation is something that most conservatives and Republicans have spent years pretending was not happening, because it did not fit in with the assumption that working- and middle-class Americans were thriving as part of the “greatest story never told.” It is the failure to acknowledge and address all of these things along with the preference for using symbolic gimmickry that begin to account for the lamentable states of conservatism and the GOP.

H/T John Cole

dave ought to be more grateful. Groovy. How much more grateful ought dave to be?

Its clear that we aren't getting through to each other and I think I have done my best to clarify the issue so I guess there is no point in continuing. I will merely point out for the record that you say you get my point but your summary I cited above doesn't even come close to understanding what the central issue is here in my estimation. This has absolutely nothing at all to do with dave's level of gratitude but if that isn't clear by now then I am not capable of making it any more clear.

Slarti,

Tax increases are relative, just like fairness. "Increase" implies a change, not a level. An argument that's strictly about change, as opposed to level, would seem pertinent no matter what level we start from. If the top marginal rate were only 10%, what makes you think d'd'd'dave would not be arguing against an "increase" to 15%?

Now, I can honor an argument that says our current tax structure is optimal, and therefore changes to it, in either direction, are undesirable. But that kind of argument is NOT what I'm hearing from the likes of d'd'd'dave.

--TP

"Higher taxes penalize people for being successful."

SFAIK, no one in this thread has said that, but the phrase does seem to be the unspoken basis for complaints about higher taxes.

Not onerous, mind you. Not 95%, not 75%; not even 50%. Just 33% to 39.5%; OK, let's round that up to 40%.

40% taxation is 'punishing success.'

Which leads me to wonder, as I always do during these kinds of discussions, what does that make those of us who *are* paying taxes?

Failures? Losers? Chumps?

Tell me, is it only failures who pay for the nation's defense? Only failures pay to keep Congress, the Federal Courts, and the Federal Treasury going?

Only losers pay for nationwide public education? national highways?

Only chumps pony up to pay for environmental policies? upkeep for our national parks,and salaries for the Park Rangers?

Seems kid of odd to me, relegating responsibility for keeping the nation safe and functioning to a bunch of chumps.

But I also think that throwing more $ at a problem is not always the answer. I prefer to focus initially on reducing waste and overhead. If you do that first, and make the process transparent so I can really see that you did your best – then when you tell me you still need more money for the program I’ll be less likely to resist. But we don’t tend to do that much…

That is a large part of Obama's plan. (Check out what he says about http://www.recovery.gov/?q=content/accountability-and-transparency>accountability and transparency.

"We cannot overstate the importance of this effort. We are asking the American people to trust their government with an unprecedented level of funding to address the economic emergency. In return, we must prove to them that their dollars are being invested in initiatives and strategies that make a difference in their communities and across the country. Following through on our commitments for accountability and openness will create a foundation upon which we can build as we continue to tackle the economic crisis and the many other challenges facing our nation."

This has absolutely nothing at all to do with dave's level of gratitude

Great. That's what you're fastening on. I believe I've also used the words obligation and debt in reference to his purported (and I say: completely unquantifiable) burden to society for being his assistant in making him rich, with no comment from you. If you don't like any of those words, feel free to offer one of your own.

Or not. I'm done with this.

That sounded extremely annoyed, on reread, but it should be amended to sound tired and a little frustrated, with a dash of getting some last-minute software changes put in.

"Brett: your word is my command! I'm a Kantian. I think that utilitarianism, act- or otherwise, is wrong. I have thought so ever since my first intro ethics course."

Cool! So, how do you square progressive taxation, or indeed any form of taxation other than fee for service, with the demand that people not be used purely as means to an end?

I don't think progressive taxation is "fair", but fairness isn't the only value, and it's several kinds of catagory errors to collapse justice and practicality and mercy into "fairness".

Justice demands that people pay for what they get, and get what they pay for. (IMO, anyway.) Mercy says, "That's too hard on the poor.", and practicality says, "You can't squeeze blood out of a stone."

So that's two values against one, in favor of taxing some people more than they, according to justice, ought to be paying.

But we take that money from them, not because they "owe" it in any moral sense, that's confusion. We take it from them in spite of their not owing it, and they do have a valid gripe.

That sounded extremely annoyed, on reread, but it should be amended to sound tired and a little frustrated, with a dash of getting some last-minute software changes put in.

FWIW I appreciate the efforts you've made to comment here. Perhaps this thread has gotten overly long and that is making everybody cranky.

I blame the pagination.

I'm off to WhiteHouse.gov to start digging through the proposed 2010 budget now.

May you seek more than vindication and find more than affirmation :).

I'm proposing a tax scheme based on the inverse tangent, asymptotic at -5% and 50% with an x intercept at $8k (for individuals) and inflection point at $300k. If my visualization is correct, that would put someone making $592k at 45%. How about it?

So, how do you square progressive taxation, or indeed any form of taxation other than fee for service, with the demand that people not be used purely as means to an end?

Fee for service doesn't work -- flat out Does. Not. Work. -- with cooperative needs: police, firetrucks, roads, etc. It doesn't matter if you use a utilitarian framework, or any other, some services can't be provided on any Pay-per-Use basis.

I believe I've also used the words obligation and debt in reference to his purported (and I say: completely unquantifiable) burden to society for being his assistant in making him rich, with no comment from you.

One last try: Its not about what dave owes. It has nothing to do with his feelings or attitudes. To look at it as even being an argument about what dave claims is his particular accumulation of wealth is to miss the point entirely.

Tony P put it pretty clearly I think. dave doesn't want to pay more taxes and that is an entirely unremarkable sentiment. But if one is trying to make an argument about what ought to be the optimal tax code, then it is not especially helpful to try and make that case from the extraordinarily narrow example of one person who thinks he might have less money after the tax increase. That is because what creates wealth for dave or anyone else in any society is far more complicated set of equations than that. dave's situation and his particular resistance to the tax increase provides us very little information because it is quite easy to imagine a circumstance in which he is charged far less in taxes but in which his surrounding economic environment would leave him with far less wealth. That is the point of the hypothetical and it doesn't seem like an especially complicated or controversial argument to me. But it is one that dave consistently seems to simply ignore when he tells of his elaborate investments and how the nazi-like tax increase of 3% is going to ruin all of that and make life worse for all those people he is helping. Whether he feels grateful or obliged or indebted to pay more taxes is entirely beside the point. Whether his arguments appreciate the scope of the debate around changes to tax policy is.

If you don't like any of those words, feel free to offer one of your own.

I have. I have offered plenty of my own words and yet here we are. My fault I am sure but I think many others have made the case quite a bit more clearly than I have. My only suggestion at this point is to try some of those like the one I linked to TonyP above or hairshirthedonist's.

Jeff: That is a large part of Obama's plan.

It’s a large part of what he said. So far, not so much. 5 days online, etc. – not so far.

I’m still holding out hope though.

And change even…

this is a Democratic meme of the last the decade (or so) that troubles me. (my bold, if it all works):

I think this is bad for the country -- we need a prosperous middle class, and something resembling equality of opportunity -- but also baffling on grounds of fairness

so middle class money is suppose trickle down? all those hard-working doctors and lawyers are going to shop in the Tenderloin? Or will the Tenderloin evict the poor, marginalizing them to the up-and-coming Fresno Favela?

I suspect that some social science studies have shown that a happy population is one with an expanding middle class.

but I'm with the old Left who use to argue (and I thought Bill Clinton did) that it is our interest you to get money into pockets of the poor, if only to expand the consumers in the market.

how does taking care of the middle class reduce the number below the poverty line?

how does taking care of the middle class reduce the number below the poverty line?

Long term strategy and gradualism, probably. Don't spook everyone if'n you move too fast...



but I'm with the old Left who use to argue (and I thought Bill Clinton did) that it is our interest you to get money into pockets of the poor, if only to expand the consumers in the market.

how does taking care of the middle class reduce the number below the poverty line?

In 19th Cen. England the term "middle class" referred to people who while not amongst the truly rich, were nonetheless prosperous enough that they could afford to hire domestic servants, which meant that they were either extremely well paid urban professionals, or were independently wealthy and able to live off of modest investment incomes.

We have a term for folks like that here in the US, we call them "upper middle class"; the useage of the term has shifted.

Today "middle class" (unqualified) is American-speak for what in other parts of the world is called "working class" with those more prosperous folks mentioned above tacked onto the top end of the category to round things off. We don't like to use terms like "proletariat" or admit that we have a true working class which is quite large in the US, because to do so offends our sense of exceptionalism.

It’s a large part of what he said. So far, not so much. 5 days online, etc. – not so far.

The quote I posted was a memo to all the agencies. I see no reason not to believe it.

Did you visit the web-site?

OCSteve: I’m not at all happy with Obama’s “eat the rich” rhetoric.

Not having watched the speech to Congress, or whatever recent Obama statements you're referencing, I could use some specifics of this rhetoric.

But the actual things he's proposing to do are exactly what he said he would do in every stump speech he made during the campaign: a tax cut for everyone making less than $250,000, and paying for univeral health care access with tax increases for those making more than that (a lot of which, I assumed, would simply be the expiration of the Bush tax cuts).

"Fee for service doesn't work -- flat out Does. Not. Work."

Works for a lot of stuff, doesn't work for some other stuff. (Didn't I say as much?) But that wasn't the question. Just because something "works" doesn't mean a theory of ethics permits it.

hairshirthedonist: I'm proposing a tax scheme based on the inverse tangent

Having read all the way through, this is a substantive idea that I can get behind. Couple it with treating all income equally and shift to cover the budget.

von: point 2 on the other page.

It isn't just the SE tax. It's covering your own health care, not having the backup of unemployment insurance, having to resort to a lawyer to get paid and having no employment security beyond your own reputation. That's tough for a family of four on $250K in Chicago. It's tough for a single person in NYC on less than $50K. Add in school loans and life looks less rosy. If Freelancers Union is right, 30% of the workforce is freelance. You'd think we'd be able to get something done about this. Something could include compelling employers to cover those costs regardless of an employees status (status is not a good description) or a shift of payroll taxes etc. from employer to employee. Either would be a more 'fair' situation.


Just as an aside, I also read d'd'd'dave's several first comments as boiling down to "rich people are rich because they are special". I thought that the various permutations of "rich people are rich because they've got more money, no one is special" pretty much made sense.

But the actual things he's proposing to do are exactly what he said he would do in every stump speech he made during the campaign: a tax cut for everyone making less than $250,000, and paying for univeral health care access with tax increases for those making more than that (a lot of which, I assumed, would simply be the expiration of the Bush tax cuts).

I'm afraid Judd Gregg did a great job on NPR tonight spinning that above 250K bracket as anything but the ruling elite:

Gregg says those making over $250,000 are frequently the small-business owners and sole proprietors.

"Seventy percent of the jobs in America today are created by small-business people," Gregg says. "So basically what you're putting in place is a tax burden which is going to make it very difficult for those folks who are the entrepreneurs and job creators in our society to be successful."

The idea of having small business owners pay for a new insurance plan is not going to fly.

The idea of having small business owners pay for a new insurance plan is not going to fly.

How much of them are already paying for health insurance right now? (Not a rhetorical question; I think it's pertinent to see if it's a good idea or not).

Alternative frame:

[...] Over the last three decades, the pretax incomes of the wealthiest households have risen far more than they have for other households, while the tax rates for top earners have fallen more than they have for others, according to the Congressional Budget Office.

As a result, the average post-tax income of the top 1 percent of households has jumped by roughly $1 million since 1979, adjusted for inflation, to $1.4 million. Pay for most families has risen only slightly faster than inflation.

Before becoming Mr. Obama’s top economic adviser, Lawrence H. Summers liked to tell a hypothetical story to distill the trend. The increase in inequality, Mr. Summers would say, meant that each family in the bottom 80 percent of the income distribution was effectively sending a $10,000 check, every year, to the top 1 percent of earners.

Mr. Obama’s budget reflects that sensibility. Budget experts were still sorting through the details on Thursday, but it appeared that various tax cuts and credits aimed at the middle class and the poor would increase the take-home pay of the median household by roughly $800.

The tax increases on the top 1 percent, meanwhile, will most likely cost them $100,000 a year.

Today "middle class" (unqualified) is American-speak for what in other parts of the world is called "working class" with those more prosperous folks mentioned above tacked onto the top end of the category to round things off. We don't like to use terms like "proletariat" or admit that we have a true working class which is quite large in the US, because to do so offends our sense of exceptionalism.

does that tell us how, if not by trickling down, our helping the middle class is going to reduce the number of people below the poverty line and in turn boost the numbers of consumers in the marketplace?

(Truly, everybody, with me, you're free to define categories any way you want, providing that afterward you don't conclude that in order to reach our teleological ends, the members in the category must be gassed, purged, etc..)

Redwood, I think you are looking at the term middle class as a statistical notion, and dealing with the middle class will always exclude the lower class. I'd suggest that the term middle class has always had a definition that makes it seem like everyone from the lower class could, somehow, make it into the middle class. When viewed as a mathematical construct, it is idiotic, but it's like the line about Lake Woebegone, 'where all the children are above average'. In fact, a quick google, shows that this is the name of the effect.

How does Gregg explain how small businesses managed to exist in the Clinton years?

Just one comment to "d'd'd'dave"...

If you want to invoke personal credibility, you have to sign your name. When people link to news stories and other facts, those sources usually have identifiable writers, who take responsibility for what they write. If you want people to take your stories seriously, you have to either sign your name or link to someone who does. Anonymously, you can make a logical case, express emotion, and generally say what you want, but making an argument that depends on us believing what you write wastes your time and ours, unless you sign your name. Network anonymity has only that one disadvantage.

Can we please stifle the "small business" bullpuckey?

I've been self-employed for 16 years now. I am a small business. And I have always done my own tax returns. And I say Republicans are either blithering idiots or bald-faced frauds on this subject.

Personal income taxes apply to personal income. That's the bottom line on Schedule C, not the top line. It's what's left in my own pocket after expenses like paying employees, a.k.a. "creating jobs".

Quick: if my small business grosses $1 million a year, how will my income tax bill change when Obama lets Dubya's tax rates revert back to Clinton's rates? If you did not instantly answer "Not enough data", you have no clue what you're talking about.

Okay, let's say I pay $200K for materials, rent, and so forth, and I have 10 workers who each cost me $50K per year. So my personal income -- the income that I "pay taxes on at personal rates", is $300K. So Obama will "raise my taxes."

Now, why in bleeping hell shouldn't he? I mean: what makes my $300K personal income from my "small business" more sacred than your $300K salary from a "big" business?

Please understand, the numbers above are hypothetical. (I can only dream of a $300K personal income. You'd have to raise the top marginal tax rate to about 90% before I'd stop dreaming of it.) That should be no surprise. Sole-prop small business owners who make $300K in personal income are as rare as Republicans who talk honestly about small business taxes.

Still, let's say my $1M business is chugging along with 10 workers, I'm personally pulling $300K out of it, and Obama "raises my taxes" by $50K -- the cost of one worker.

One thing I could do is fire one of my workers to make up for my extra taxes. But I have not been paying those workers to sit around and do nothing. To first order, reducing my workforce will reduce the gross income I can generate. So my personal take still goes down.

Another thing I could do is this: hire another worker. If my personal take is going to drop by $50K anyway, I am better off spending that money to "create a new job" rather than send it to the IRS. Crudely speaking, at a 40% marginal rate on my personal income, the net cost to me of that 11th employee is only $30K. If that 11th $50K worker generates only $30K in extra gross revenue, I break even!

Note that, in this story, the 11th job in my small business doesn't have to be worth its keep. Without my personal tax increase, I would have no incentive to "create a new job" at $50K unless it resulted in at least $50K more revenue. With my personal tax increase, I have more incentive to hire another worker.

It will not do to suggest that Republicans lie about everything. It will not do to suggest that Republicans are wrong about everything. But when they transparently misrepresent one particular thing I know something about ...

--TP

Can we please stifle the "small business" bullpuckey?

I've been self-employed for 16 years now. I am a small business. And I have always done my own tax returns. And I say Republicans are either blithering idiots or bald-faced frauds on this subject.

Yeah, well, that's the sleight of hand, conflating business revenue with personal income. Republicans are consistent on this. We saw that with Joe the Plumber

I thought that what we saw with Joe the Plumber was a fraudulent messenger.


Another thing I could do is this: hire another worker. If my personal take is going to drop by $50K anyway, I am better off spending that money to "create a new job" rather than send it to the IRS. Crudely speaking, at a 40% marginal rate on my personal income, the net cost to me of that 11th employee is only $30K. If that 11th $50K worker generates only $30K in extra gross revenue, I break even!

In my observation, small businesses that hire employees (usually BS artists in marketing) to bring in more business are desperate.

Sound small businesses hire employees when the demand for the business' services/goods is such that, unless they do hire someone, the business will lose customers.

But that's not always a bad thing.

Tony P

//With my personal tax increase, I have more incentive to hire another worker.//

Why wouldn't you hire the 11th worker before the rate increase? In fact, why wouldn't you hire a 12th, 13th etc. up to the market limit where another worker can't possibly produce enough marginal revenue to justify it under any scenario? Are there capital, personal or other constraints that you haven't included in this story that could effect that decision and have kept you from adding employees up to the market limit already? Why would those unnamed constraints suddenly go away if the margin tax rate increased?

The project

http://ddddavesproject.blogspot.com/

Why wouldn't you hire the 11th worker before the rate increase?

He explained this quite clearly.

//He explained this quite clearly.//

I don't think so.

He asks us to assume that adding a worker increases revenue and pretax-net income. And that he would add an employee if taxes decreased his net take home pay, so that by increasing the scale of his business his net after-tax would be the same. If it is true that simply adding an employee will increase the gross revenue and pre-tax net income then why hasn't he already added 500 workers? Either the assumption is false or there are other constraints on him. For example, maybe he doesn't have the time to supervise more workers. Maybe adding workers demands more capital, which he doesn't have or is unwilling to invest. Maybe he just doesn't want to make any more personal effort. Whatever the reason: if it was reason enough not to hire and make extra money before the tax rate increase then why will it be more reason to afterwards?

For what it's worth, I'm actually pretty sure at this point that d'd'd'dave is on the level--at least insofar as the development project he described in one of his early posts is to some extent how he described it.

There are a few legible items on the images he posted that allowed me to pinpoint the project's exact location in Gmaps, with a little analysis of the maps and a stroll through the town's web site.

It is in fact within 500m of commuter light rail and across the street from the town civic center. And there is in fact a comprehensive redevelopment initiative in that town with recent movement on it. Actually, it looks like a really nice place to live, but that's neither here nor there.

I can probably even take a pretty reasoned guess at Dave's real-world identity at this point, but my aim here isn't to stalk him or out him, just to verify the claims he's made.

I stake no ground as to whether the entirety of his statements are true, but at this point I have more than enough evidence to give him the benefit of the doubt and a sincere public apology. I'd suggest that people stick to challenging his ideological statements and refrain from gainsaying the things he says about his occupation.

d'd'd'dave,

I can't resist quoting Barney Frank here: "I can explain it to you; I can't understand it for you." But in all seriousness, let me back up:

My main point was that Republicans shamelessly obfuscate the distinction between gross and net every time they open their yaps about "small business" and "personal rates".

My subsidiary point was that Republicans who say that a tax increase on the personal income of sole-props making $300K will "cost jobs" are making exactly as much of an "assumption" as you say I am. They ignore "other constraints" exactly as much as I do.

Of course other constraints are involved. But "all else being equal" is the basis for any sort of analysis of marginal effects -- disingenuous Republican analysis, my analysis. The difference is, I don't obfuscate the difference between gross and net.

--TP

I would in any case propose a moratorium on speculation about dddd's truthfulness or lack of it. It should not make any difference to his arguments whether they are hypothetical or not.

Tony P

Let's test the math here:

//Still, let's say my $1M business is chugging along with 10 workers, I'm personally pulling $300K out of it, and Obama "raises my taxes" by $50K -- the cost of one worker.//

~Cost of one worker: $50,000 (given)
~Pre-tax profit attributable to one worker: $30,000. (calculated. $300k/10. Assumes the labor of owner produces no share of the net profit)
~Incremental taxes due to Obama's rate increase: $50,000 (given)
~Implied incremental rate increase: 16.6% (calculated as $50k / $300k)

//One thing I could do is fire one of my workers to make up for my extra taxes.//

~Pre-tax profit not earned when worker is fired: $30,000 (see above)
~'Extra' taxes not paid when worker is fired: $50,000 (given)
~Implied 'extra' tax rate: 166% (calculated as $50k / $30k. Does not even factor in taxes saved on base rate before Obama's 'extra' rate increase). Looks like the after-tax net has actually increased: lose $30k but gain $50k.

Hmmm? Not sure how this works. But let's put that confusion on a shelf and move on.

//But I have not been paying those workers to sit around and do nothing. To first order, reducing my workforce will reduce the gross income I can generate. So my personal take still goes down.//

This makes sense because $270k personal take is less than $300k personal take. $270k being calculated as $300k (given) minus $30k (see above). I am assuming still that 'personal take' is a pre-tax number.

//Another thing I could do is this: hire another worker. If my personal take is going to drop by $50K anyway, I am better off spending that money to "create a new job" rather than send it to the IRS. Crudely speaking, at a 40% marginal rate on my personal income, the net cost to me of that 11th employee is only $30K. If that 11th $50K worker generates only $30K in extra gross revenue, I break even!//

~Implied marginal rate before Obama's 'extra' rate increase: 23.4% (calculated as 40% minus 16.6% . I'm going to resist looking at the 166% we put on the shelf).
~Post-tax position after Obamas extra tax rate increase if no hiring or firing taxes place: $180k. (calculated as $300k less $120k of taxes. Taxes are $300k x 40% (given)).
~Pre-tax personal take after hiring an 11th worker who brings in $30k of gross revenues but costs $50k in compensation: $300k +$30k - $50k = $280k.
~Post-tax position after hiring 11th worker: $168k. (calculated as $280k less $112k of taxes. Taxes are $280k x 40% (given)).

Hmmm. This doesn't quite work either. In fact, for Tony P to be in a post-tax position of $180k after hiring the 11th worker, the worker must bring in $50k in gross revenues; enough to match his compensation.

//Note that, in this story, the 11th job in my small business doesn't have to be worth its keep.//

I think I've shown that this is a false statement.

//Without my personal tax increase, I would have no incentive to "create a new job" at $50K unless it resulted in at least $50K more revenue.//

I agree.

//With my personal tax increase, I have more incentive to hire another worker.//

I agree. But it is not for the reason you have given. You have an incentive to hire 2.76 more employees; and they each must be just as profitable as the original 10. If you don't, your after-tax position will be $50,000 less than it was before the increase.

~Your after-tax position before the 'extra tax' increase was $229,800. This is calculated as $300k minus taxes of $300k x 23.4% (see above).
~To have an after-tax position after the 'extra tax' increase you'd have to have pre-tax income of $383,000. This is calculated as $383k minus taxes of $383k x 40% (see above).
~You'll need to hire 2.76 workers x $30k gross profit per worker to increase your pre-tax income to $383k.

You ended by saying:

//It will not do to suggest that Republicans lie about everything. It will not do to suggest that Republicans are wrong about everything. But when they transparently misrepresent one particular thing I know something about ...//

I think I'll just leave that alone.

You said early in the comment:

//I can only dream of a $300K personal income.//

I think we can see why.

I would in any case propose a moratorium on speculation about dddd's truthfulness or lack of it. It should not make any difference to his arguments whether they are hypothetical or not.

I disagree in principle. When someone uses a personal anecdote to directly support their argument, that makes the veracity of said anecdote very much germane to the discussion.

"There are a few legible items on the images he posted that allowed me to pinpoint the project's exact location in Gmaps, with a little analysis of the maps and a stroll through the town's web site."

Is the name "Del Webb" relevant, or have I gone astray?

So, this is really a discussion about fairness

Yes. That is exactly right.

We have a progressive income tax in this country.

There is a perfectly logical argument that a progressive rate is unfair, because the tax is levied at different rates for different people.

There is a perfectly logical argument that a progressive rate is fair, because the marginal benefit that rich people get from each additional dollar is generally less that what poorer folks get.

Where people land on this generally depends on how much money they have. Not always, but often enough that the word "generally" applies.

The top marginal rate, and the income level at which it kicks in, has been tweaked and tuned for as long as we have had an income tax at all. My bold prediction is that it will continue to be tweaked and tuned, for as long as we have an income tax.

We're tweaking it again.

As I make it out, dave has two complaints.

One is that an increase in the top marginal rate is going to cost him money. That's highly likely to be true. All I can say is sometimes policy goes your way, and sometimes it doesn't. The change that is actually proposed, and which might actually become law, is not going to crush anyone.

Next time we mess around with the rates, maybe it'll go your way. Bon chance.

If I may sort of read between the lines, dave's second complaint is that lots of people have negative attitudes toward wealthy people, and he feels this is unfair.

True, and true. Lots of folks have negative attitudes towards wealthy people, and it is unfair.

Lots of people have negative attitudes towards every conceivable group of people in the world. It's all unfair.

C'est la vie.

As far as the *public policy question* goes, IMVHO the modest increase in the top marginal tax rate, along with the decrease in the rates for everyone else, is a pretty good idea for the present circumstances. When those change, we will no doubt revisit it.

But the level of changes we're talking about, relative to the range of rates and points at which they kick in that we've had over the last 100 years, come damned close to noise.

If that small of an adjustment is going to make the overall situation better, I say it's a great idea.

//My main point was that Republicans shamelessly obfuscate the distinction between gross and net every time they open their yaps about "small business" and "personal rates".//

Cite please.

//My subsidiary point was that Republicans who say that a tax increase on the personal income of sole-props making $300K will "cost jobs" are making exactly as much of an "assumption" as you say I am. They ignore "other constraints" exactly as much as I do.

//Of course other constraints are involved.//

coupled with

//I can only dream of a $300K personal income.//

Suggests that the desire to make more exists but something unmentioned constrains you from hiring more workers today.

You insist on //all else being equal// ergo if Obama raised your rates you would continue to be constrained from hiring more workers.

Is the name "Del Webb" relevant, or have I gone astray?

I don't think so. My guess could be wrong, but I prefer not to engage in public speculation about anonymous people's real life identities. In retrospect I probably should've just left that paragraph out; it wasn't relevant to the point I was making.

"My guess could be wrong, but I prefer not to engage in public speculation about anonymous people's real life identities."

I wasn't speculating about the person; I was speculating about the place. I'm thinking a certain Southwestern state, but, as I indicated, I could also be wrong.

I mean, Del Webb has been dead for thirty-four years, after all. I was referring to one of his communities, which are in a whole bunch of states.

I think the idea is to drop it, Gary

//As I make it out, dave has two complaints.

One is that an increase in the top marginal rate is going to cost him money....

If I may sort of read between the lines, dave's second complaint is that lots of people have negative attitudes toward wealthy people, and he feels this is unfair.//

This is not exactly my position. It is true it will cost me money. Paying extra money will not effect my standard of living much. (your marginal benefit notion). I have enough true friends so that your second item doesn't penetrate my shell very often. And I'm sure people can make some valid complaints about me too.

My position is closer to: 1) people think money in rich hands is idle money that the people don't benefit from. I keep trying to point to real world benefits the people are receiving from my use of money now that they will lose if I pay more taxes. They are arguing for a benefit without counting the cost to them. They truly think that if it costs me, or people like me, that it doesn't cost them. Then later, when the consequences I was pointing at actually do effect them, they say: 'those rich folks have conspired against us again." and 2) I am strongly anchored to your first definition of fair. So much so that I can't even associate the word 'fair' with the second. I understand marginal benefit but to me that is a separate issue than fair. And so it irritates me when someone says 'fair' and means the second definition. I'm completely okay with someone saying: 'it's not fair but we're going to do it anyway." But to try to convince me it's fair is like saying up is down and down is up. This second complaint (my inability to accept variances in word definitions) is obviously my problem and not someone elses.

d'd'd'd'd'etc.: You are upset that the rich are denigrated. OK. But way up at the start of this thread, days ago, *you* came out with the following:

//ESPECIALLY for the rich,// Emphatic bastards. How DARE they excel. We will rise as a people as we devour those who excel! Strive ye people for mediocrity. Strive for ordinariness.

By direct apposition, you suggest, therefore, that "the rich" are equivalent to "those who excel" - and the rest of us, who are not rich, are mired in mediocrity and ordinariness.

I do not in any way agree with this: it is stupid sub-Randian cant.

You may well have made your own money through your own "excellence" - we are not in a position to judge that. But every study of wealth in America, AFAIK, shows that the one thing the rich "excel" at, far above all others, is in choosing to be born to rich parents.

And I resent - greatly - the implication that such "excellence" is to be respected above the qualities shown by others in society who have NOT chosen their parents so wisely, nor dedicated themselves to the pursuit of wealth as the summum bonum

I realize there is not much point in saying this to you, because anyone who assumes a direct equivalence between wealth and excellence is living in a different moral and intellectual universe from mine.

But since you keep on posting here, I thought I should at least mention it before I retire again from the pointless conversation.

"But every study of wealth in America, AFAIK, shows that the one thing the rich 'excel' at, far above all others, is in choosing to be born to rich parents."

On success.

dr ngo

First, it is a pointless conversation because people want to try finding fault with the details rather than accept the broader point. The broader point being that $1 in additional taxes taken from me for the public benefit reduces my direct expenditures for the public benefit by at least $2. Frank laid it out very well back in october (see Liberal japonicus' reference). ps: Frank's numbers were correct.

Second, some are born wealthy. I was not. My parents were intelligent, charming, loyal to one another, etc. but they were not wealthy. They were solidly middle class. My father was a colonel in the army. It is a more or less distinguished occupation but it does not produce wealth. I started out in 1983 with $4,000 i had saved over the course of two years from my $18,600 per year job. (My peers were buying things while I was saving.) I supplemented that with a $2,000 loan from my parents. It was very helpful but not a large number. Enough of the barefoot through the snow stories...

Third, out of thousands of words that i've written you hang onto the word 'excel'. I suppose 'stand out' would have been a more accurate choice of words. I mean standout in the sense of 'noticeable' rather than in the sense of 'special'. Aside from that, pointing to one who excels is not to say that the ones not pointed at don't excel. It is not even a value judgement about which pursuits are more 'excellent' than others. I'm afraid that is in your own mind.

Fourth, there is excellence in every walk of life. There are excellent teachers of piano to 7 year-olds. There are excellent cleaners of toilets. If society values each pursuit equally, why is it that society requisitions a higher proportion from the wealthy than from the piano teacher and the janitor. The wealthy are required to pay 35% of their marginal fruits whereas the piano teacher is not required to give up 35% of his/her piano teaching to the public nor is the janitor required to give up 35% of his/her cleaning tine to the public.

Again, this is pointless. From October, when I first appeared as Frank, until now, the finest progressives just CANNOT accept that a dollar taken from me for the public benefit is two dollars taken from the public benefit. It is measurably inefficient.

Finally, I have become convinced that progressives are more interested in the equality of a population's standard of living than the absolute value of the standard of living. They are pursuing policies that will decrease the mean, median, and mode standard of living in favor of equality. To exaggerate: if we all lived in equal squalor they'd be happier than if 70 percent were above squalor and 30% were in the squalor.

The stereotype: http://www.youtube.com/watch?v=IFabjc6mFk4

The reality: http://www.nytimes.com/books/first/s/stanley-millionaire.html

Multiplier: http://bigpicture.typepad.com/comments/2006/08/multiplier_effe.html

Each dollar spent on housing construction generates $1.27 in additional economic activity.

As Frank showed in October, every $1 of incremental tax beyond what I already pay, means I spend $2 less on housing construction. (Since I borrow another dollar to match my equity contribution to a project)

Ergo, a marginal $1 dollar of taxation to me reduces economic activity by $2.54 (calculated as $1 x 2 x 1.27). Obama's folks have claimed that their spending creates a 1.6 multiple. 2.54 is better than 1.6.

ref: http://www.businessweek.com/bwdaily/dnflash/content/jan2009/db20090127_702149.htm

[Ed: dave's link takes us here.]

The broader point being that $1 in additional taxes taken from me for [what I think is] the public benefit reduces my direct expenditures for [what I think is] the public benefit by at least $2.

In the thousands of words you have written, I don't believe that you have ever defined what you mean by the public benefit, but it seems clear that what benefits you and what benefits the public are largely congruent in your mind. The people on this board whose opinions I respect are those who are willing to come to the question of public benefit and accept that it may not be what it seems at first glance.

Simply using the figures in your exaggeration, 30% of the population living in squalor is the price we pay for 70% of the population living at a higher standard. How 'squalor' and 'higher standard' are defined and how much 'squalor' we accept are precisely the crux of the issue, and it is precisely what you avoid. Thus, if 30% of the people are thrown out of their residences because it is necessary to raise the standard for the other 70%, or if the definition of 'affordable housing' is such that it leaves some percentage out of luck, that's just the price we pay for progress. While this might work for an individual community to move people they feel are undesirable out and have them replaced by people who pay more taxes, at some point, some community somewhere else has to absorb those people.

I also think that of the current problems facing the country, I don't think they can be blamed on your 30% tranche. Note that I am just using your figures and this point doesn't depend how large or small this group is, though the fact that you are willing to put forward that 1 person out of three may need to live in squalor for the other two to enjoy the full fruits of society is telling.

I'd also point out that this notion of some having to live in squalor is the price that has to be paid so that some can live to their full potential of imported automobiles and the finer things in life is a rather unchristian one at its core. So if you are saying that progressives are adopting a christian standard in their approach to poverty, I'd certainly tend to agree with you.

and thanks for the link to the article and the editor who hyperlinked it. There is no mention I can see of a 2.54 figure.

LJ

My exaggeration example was not saying that 30% would be lowered in order to raise 70%. I was suggesting that efficiency in the use of money raises the standard of living of the 70% a bit while leaving the 30% where they were. More progress occurs but it is unequally distributed. I was saying that the progressive position values equality more than efficiency and in doing so sacrifices some degree of overall progress. The progressive position leaves everyone at the low value. It does not raise the 70%.

The hyperlink mentions 1.27. I get to 2.54 by multiplying by 2. I even showed my math. Perhaps you missed it. if I keep the marginal tax dollar I pair it with an equal amount of borrowing and spend $2 on housing construction. The two dollars multiplies by 1.27 to 2.54 as it moves through the economy.

One could argue that Obama can borrow a $1 to pair with the tax dollar he takes from me but he will do that anyway. I will not be able to if he takes what would be my equity dollar because i must match borrowing with equity.

Finally, I accept your point that society may want what Obama spends my dollar on more than what I would spend it on generating commerce. We can only speculate. I've shown that my dollar would go 100% to employment. I think it is generally accepted that a dollar of pay is better than a dollar of welfare.

LJ

There were two web addresses in my 2:03p comment. The first supports the 1.27 I used for construction spending. The second supports Obama's 1.6 number for the overall stimulus. The editor hyperlinked only the second one.

"The editor" was me, and I only hyperlinked one because it got truncated by the comments window.

Probably best to learn how to hyperlink, yourself, so that you can make your own points effectively.

"We can only speculate. I've shown that my dollar would go 100% to employment. I think it is generally accepted that a dollar of pay is better than a dollar of welfare."

A lot of people are too young, or too old, or too disabled, to work.

And often a dollar of government spending returns far more dollars in return, too.

How To Link.

Thank you for the correction. I don't share your assumption that simply multiplying by two based on your assertion of $1 taken away from you and $1 spent on something else is accurate, but the current housing prices do not seem sustainable, and I'm sure that you can't be arguing that all of the dollars that Obama's tax revisions will collect are necessarily going to housing. Thus, your multiplier effect is limited to the the theoretical amount of housing stock that can be constructed. As the Obama budget argues for the creation of green retrofitting and the industries to supply such (note that in your link, the multiplier for housing is exceeded by manufacturing), I think that Obama is making the strategic choices that you are unable to.

Also, as others pointed out to you when you were Frank, one must be careful in using personal anecdotes in discussions like this.
Having said that, I would be very interested in knowing more about your work, what safety network you try and create/utilize to make sure that people dislocated by your plans are not put into squalor, and where you would draw the line.

While there might be a philosophical distinction between putting people in squalor or leaving people in squalor, casting out the figure of 1 in 3 indicates that you would tolerate a much larger number of people left behind. Given that the 10% unemployment level is often given as a problematic figure, it seems that even 1 out of 10 might be a problem for the majority of the population.

If what d'd'd'dave says is true, why should we limit ourselves to cutting his taxes? Let's drop them to zero and then give him additional money. All our economic problems will be solved if we just give all the stimulus money to him, since he can achieve a much higher multiplier than anything the government can do with the money.

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