Soundtrack for the file "More"

by von

I previously noted that Obama's spending and Obama's tax cuts cannot coexist in perpetuity.  Clive Crook notes the same in a recent article in the Financial Times.  You should read the full Crook in the pink pages, but here's a snippet:

In short, whether it intends to or not, Congress is leaning towards making the long-term deficit even bigger. It is preparing to underwrite a large and permanent expansion of the government’s spending obligations while failing to provide for a corresponding expansion of the tax base. A crucial question is therefore whether, and for how long, Mr Obama will continue to be bound by his pledge to raise income taxes “by not one cent” for almost all Americans.

Mr Obama intends to squeeze the rich, but the scope for this may be more limited than US liberals would wish. Few Americans seem aware that the US income tax code, as a recent Organisation for Economic Co-operation and Development studyshowed, is already one of the most progressive.* Even before the rise in top marginal rates promised by Mr Obama, the US income tax collects 45 per cent of its revenues from the highest-income decile. Compare that with Britain at 39 per cent, Canada at 36 per cent, France at 28 per cent, Sweden at 27 per cent and an OECD average of 32 per cent.

This difference is only partly explained by the less-equal US income distribution. The fact that the US has no broadly based national sales tax – value added taxes make Europe’s overall tax codes less progressive still – only underlines the point. The US tax system raises comparatively little revenue; what little it raises already comes disproportionately, by international standards, from the rich.

I made a similar point citing related data from OECD.  Thenotion that America under GWB had a highly progressive tax system doesn't fit the standard Democratic narrative, but it's the truth.  Once you factor in all taxes, and even accounting for the US's relatively higher income inequality,* the rich pay a greater percentage of the US tax burden then any other group by a margin that isn't matched in most other developed countries.   Obama's next rounds of proposed tax increases will skew the burden further.  This trend cannot be sustained:  "The next set of tax increases -- and they are coming -- will hit the middle class."  Obama's recent walkback from a permanent middle-class tax cut is real.

Crook wants those tax increases to hit the middle class in the form of a VAT.  I'm open to the idea, but other options should be on the table as well that do not involve tax increases.  The Democrats will not cut enough spending to avoid the inevitable tax increases, but that doesn't mean that spending cannot be controlled.  One option would to begin means testing Social Security:  Don't pay Social Security to folks who don't need Social Security; make Social Security a safety net, not an entitlement. This is an idea that would avoid further increases in the payroll tax, but it is an idea that some Democrats have opposed because they fear losing middle class support for Social Security.  It's an idea whose time has come.

President Bush was an irresponsible captain of our financial ship.  That's one reason why I didn't vote for him in 2004.  But it's no excuse for President Obama to be more irresponsible.  Two wrongs still do not make a right, even under President Obama.  Obama's budgets have consistent structural deficits and a growing debt that exceeds even Bush's excesses.  They are not sustainable.  If President Obama wants to lead on this issue -- if he truly wants to be change worthy of belief -- he needs to level with the American people:  you cannot have a puppy and a pony and a showdog too unless you are going to pay for it. 

*The fact that US income inequality has not only persisted but significantly increased (see OECD message re: US) in the face of a highly progressive income tax should suggest that maybe, just maybe, you cannot tax income inequality away.  Some new thinking is needed in this area, rather than the sad old partisan tropes that are ordinarily carted out to shadow box.

(H/T:  Sullivan.  Title inspiration.)

Comments

[ThatLeftTurnInABQ]

1937

[scott]

Time to comfort the comfortable and afflict the afflicted! Sympathy for the over-taxed rich, more taxes for the middle class, cuts to Social Security - all in the midst of the greatest economic suffering in a generation. This is exactly the right time for all of us, especially those of us who aren't rich, to tighten our belts. Yep.

[von]

Scott, no one is arguing against a short-term stimulus package in this post. And the long-term consequences of consistently spending more than you take in with taxes is clear. Moreover, contrary to your counterfactual lament, means-testing SS wouldn't cut SS for the poor. It would reduce a benefit that goes to the rich.

[dnfree]

I don't understand how means-testing social security would work. At one time I was supposed to get a pension, but my company ended the pension program several years ago. So now I have my 401(k) and social security. I'm in my sixties.

So say I had retired several years ago and you looked at my 401(k) balance at that time and said, "Hey, this person doesn't need social security!". But if you looked at it now, maybe you would say, "Hey, this person should get social security." Would you pay me back for the years I had missed?

What if I live a frugal life and use less of my savings, vs. someone who had the same amount of money and spends their 401(k) into the ground? Then do they get social security and I don't, even though we both paid in?

The hard thing about planning for retirement is the uncertainty: How long will I live? How much will I need? How will my investments in my 401(k) work out? What health issues will I encounter? How much will inflation eat away at my assets? I fail to see how you could determine the answers to those questions up front so you could decide whether I need the social security I contributed to or not.

[norbizness]

Bart: Somebody ought to ruin Gabbo's career the way he ruined Krusty's.

Lisa: Two wrongs don't make a right, Bart.

Bart: Yes they do.

Lisa: No they don't.

Bart: Yes they do!

Lisa: Daaaad!

Homer: Two wrongs make a right, Lisa.

[A.J.]

Two wrongs still do not make a right, even under President Obama.

Ah, but three lefts do....

(Sorry. The weaker the pun, the more I enjoy it...)

[cleek]

This trend cannot be sustained

it certainly can. and it will be.

there is a whole world of other countries where the poor put-upon rich can go hide, if they feel they're not appreciated here.

if he truly wants to be change worthy of belief -- he needs to level with the American people: you cannot have a puppy and a pony and a showdog too unless you are going to pay for it.

he's been very clear about that.

“Everyone in this chamber—Democrats and Republicans—will have to sacrifice some worthy priorities for which there are no dollars. And that includes me,”

[malraux]

Wait.....Just because more tax revenue comes from the highest tax bracket doesn't necessarily mean its the most progressive tax system. If American high income earners earn far more than high income earners elsewhere, then of course they'll end up paying more, while still being taxed less. Given that the marginal tax rate in the UK is 40%....

Moreover, while one party is completely insane, I don't think balancing budgets should be a priority. Lower taxes are always going to win, and its pretty clear that's all the republican party will reliably seek while in office. So if Obama were to pursue deficit reduction at the expense of health reform, for example, the next republican president will just run back up the deficit. So huge deficit and out of control health care costs. I'd rather the reverse.

[von]

I don't understand how means-testing social security would work.

Back in the day, the Concord Coalition suggested phasing out social security benefits based on yearly income (from any source, I believe). That resolves the majority of your objections regarding income fluctuations. There is still the problem of diversions, but if you count income as AGI -- as you should -- it becomes much less problematic.

“Everyone in this chamber—Democrats and Republicans—will have to sacrifice some worthy priorities for which there are no dollars. And that includes me,”

I know Obama keeps saying this (and similar things), but what is he actually doing?

[rea]

Obama's recent walkback from a permanent middle-class tax cut is real.

Once more, Von, Obama has already secured the enactment of the middle class tax cut he proposed during the campaign. He hasn't walked back from it at all--but people like you oppose its continuation. That's what you call "Obama's recent walkback"--Obama's opposition calling for the defeat of his proposals. With all due respect, that's nonsense. And we all pointed that out the last time you said this, and here you are repeating the nonsense again. Just because you want it to be true, does not make it so.

[par4]

All the countries you cited have much smaller Gini coefficients.

[Pithlord]

von,

Isn't means-testing Social Security exactly the same as increasing marginal tax rates? The difference between my before tax-and-transfer income and my after tax-and-transfer income is what affects my incentives. So objections to high marginal tax rates are also objections to means-tests.

[TheWesson]

Citing percentage of tax revenue coming from the richest decile is disingenuous and misleading.

As par4 said, this is the result of income inequality rather than an undue tax burden on the rich.

Think of a situation in which there is a flat tax, and the richest 10% possess 99% of the country's wealth.

Then the poor beleaguered top decile would be paying 99% of the tax revenue (!!)

In that hypothetical, would you like to be raising taxes on the middle class??

> Once you factor in all taxes, and even accounting for the US's relatively higher income inequality,* the rich pay a greater percentage of the US tax burden then any other group by a margin that isn't matched in most other developed countries.

Uh huh, would you like to back this up?

[Gary Farber]

"Once you factor in all taxes, and even accounting for the US's relatively higher income inequality,* the rich pay a greater percentage of the US tax burden then any other group by a margin that isn't matched in most other developed countries."

And? This should bother me why?

Meanwhile: Obama Plans to Reduce Budget Deficit to $533 Billion by 2013.

[...] The $1.3 trillion deficit Obama inherited equals 9.2 percent of gross domestic product, said the administration official. The administration’s budget proposal cuts the deficit to 3 percent of GDP by 2013, at the end of Obama’s first term.

So much for "in perpetuity."

Eliminating Social Security for everyone: "It's an idea whose time has come." It's the followup on how to dismantle Social Security after privatization failed.

"Scott, no one is arguing against a short-term stimulus package in this post."

And a good thing, too, unless you have multiple personalities.

[cleek]

I know Obama keeps saying this (and similar things), but what is he actually doing?

for one, he's asking people to pay more taxes. ask smokers if they've had to sacrifice anything, this past week.

[von]

And we all pointed that out the last time you said this, and here you are repeating the nonsense again. Just because you want it to be true, does not make it so.

Obama's "Tax Fairness Plan" did not include the caveat that it would sunset in two years.

Isn't means-testing Social Security exactly the same as increasing marginal tax rates?

No. Among other things, the people who bear the burden of the "tax" are different. (Earners v. Receivers.)

[von]

So much for "in perpetuity."

Gary, you cited Obama's numbers -- which are almost unbelievably favorable -- and yet they do, indeed, show deficits continuing "in perpetuity."

[Carleton Wu]

This difference is only partly explained by the less-equal US income distribution. The fact that the US has no broadly based national sales tax

I think that this sweeps under the rug the large amounts of money collected at the state level (and, to a lesser extent, local level). If consumers are paying an 8% sales tax, it isn't important whether this is for state or federal government if we're concerned about the progressivity of the tax burden in general.

It also conveniently ignores FICA etc. In fact, iirc each of the 5 income quintiles in the US face similar tax burdens overall, expressed as a percentage of income (treating FICA etc as taxes). Don't have time to look up the numbers now though.

The fact that US income inequality has not only persisted but significantly increased (see OECD message re: US) in the face of a highly progressive income tax should suggest that maybe, just maybe, you cannot tax income inequality away.

Is that the goal? I mean, obviously we *can*, we'll just institute a 100% of all income over 100k. But since that isn't anyone's goal (caveat: anyone serious, Im sure you can find a comment from Kos or DU), no one has advocated that tax regime.
I don't really think you believe that this is the major goal of those advocating progressive taxation; it's not only obviously inaccurate, it's also something of a class-warfare strawman, ascribing a bizarre levelling impulse to those who are in favor of it.

[Tony P.]

*The fact that US income inequality has not only persisted but significantly increased (see OECD message re: US) in the face of a highly progressive income tax should suggest that maybe, just maybe, you cannot tax income inequality away.

Suppose I don't want to "tax income inequality away", but merely wish to make life tolerable for those with the lowest incomes -- say by providing some tax-funded services to them.

Suppose I don't care whether the top income earners make hundreds or thousands of times the minimum wage, but merely wish to require that the minimum wage be enough to live on -- even if low-end workers' wages have to be subsidized by taxpayers.

Suppose in other words that I want The Government to provide a floor, without worrying about how high The Market raises the ceiling.

And suppose that in order to do these things, I need to raise the effective tax rate on the median income by 5 percentage points -- or alternatively leave that alone and raise the effective tax rate on the top 1% of incomes by 10 percentage points.

Which of those alternatives is likely to "reduce growth" more, and why?

--TP

[von]

Carleton, the OECD's figures are "all-in", meaning that FICA is definitely included (as are deductions). I'd have to check, but I also think that there is an effort to account for some state/local taxes as well.

[John Miller]

I find it interesting that so many conservatives who lambast Europe in particular and lament how the US is heading in its direction, turn around and use Europe as an example of what we should be like when it suits their purpose.

[Bernard Yomtov]

von,

Even the "all-in" OECD figures cover only income-related taxes. They do not include state sales taxes.

[mightygodking]

The fact that US income inequality has not only persisted but significantly increased (see OECD message re: US) in the face of a highly progressive income tax should suggest that maybe, just maybe, you cannot tax income inequality away.

Von, this is either dishonest or ignorant. The United States has a somewhat progressive income tax which is balanced out by other taxes which create an overall tax system that is actually regressive when you consider cuts on taxes paid primarily by the wealthy (IE, capital gains, estate taxation, et cetera).

The OECD note you reference, incidentally, specifically says that the reason for the USA's level of income inequality is a much lower level of income redistribution than in other countries. This would include both government investment and, oh yeah, taxation.

Yeesh, pull the other one, it has bells on...

[(The Original) Francis]

As the readers here are probably well aware, the only federal programs of any relevant dollar magnitude are:

1. interest on the debt;
2. Soc. Sec.;
3. Medicare/Medicaid;
4. DOD / DHS / DOE / VA.

No one's proposing defaulting on T bills. Of the remaining programs, one of these (a) has a dedicated income stream and (b) is close to actuarial solvency on that income stream.

Yet whenever progressives come to power, conservatives focus like a laser on gutting that program.

Yes, progressives understand that conservatives still want to undo the New Deal. But, come now, your timing s*cks. Bush couldn't even put a concrete proposal on the table when his party controlled both houses of Congress. Now, how much is the market down from its highs? Half?

So instead of focusing on the funding side, we now see posts focusing on the demand side. Well surprise surprise.

Let's debate what means testing of SocSec would look like. Are we talking about income or wealth? It would have to be wealth-based, because we're talking about a class of people who largely have retired.

Now personally, I love the idea of conservatives arguing for wealth-based means testing. Every year, everybody receiving SS has to file a return identifying their assets (liquid and illiquid), their debt load and their income stream. An enormous federal bureaucracy then determines what percentage of SS each filer is entitled to receive.

Wow. It would make the VA's determination of disability look positively transparent by comparison.

(Of course, I suspect that's the point. SS would turn into a poverty relief program because no one else would want to go thru the hassle. With declining numbers of recipients, the program would lose political support and ultimately vanish.)

Ya know, given the failures of private pensions (United Airlines) and 401(k)s (like the losses in my own), I think that a public pension would be pretty popular these days.

ymmv.

[Wagster]

It's been said upthread, but I'll repeat with a link... saying the tax code is progressive by pointing to the percentage of the tax burden borne by the rich is misleading. Your quote says:

This difference is only partly explained by the less-equal US income distribution.

Why not see what the top marginal tax rates are then? Here's that link. amongst the industrialized countries, only oil-rich Russia has a lower top rate. And I can't see any western countries that top the US. Can you?

[Carleton Wu]

Carleton, the OECD's figures are "all-in", meaning that FICA is definitely included (as are deductions).

Aside from Bernard's point (I didn't see the section where it specified exactly what was included), I also didn't see the part where it said that the disparity between tax income by quintile between the US and EU was driven by tax regimes rather than disparity in incomes. In fact, the country report on the US goes into much detail about the size and growth of income disparity in the US, but doesn't say anything about the tax structure being more progressive.
Maybe it says this someplace else and Ive missed it.

It seems that you're suggesting that a EU tax structure here would produce even more income inequality. Is that your point? If so, Id first counter that countries tailor their tax structures to their populations, ie that the average country in the EU has less income inequality and therefore doesn't have to shift its tax burden around to avoid 1)being underfunded or 2)crushing the poor.
Furthermore, this ignores the services that governments provide. Poor people in the US pay a significant amount of their income towards health care- this burden decreases as income rises. And this increasing burden as one goes down the income ladder does not exist in eg the UK.
[The report mentions this, btw: Redistribution of income by government plays a relatively minor role in the United States. Only in Korea is the effect smaller. This is partly because the level of spending on social benefits such as unemployment benefits and family benefits is low – equivalent to just 9% of household
incomes, while the OECD average is 22%., from the country report on the US].

[Carleton Wu]

Let's debate what means testing of SocSec would look like. Are we talking about income or wealth? It would have to be wealth-based, because we're talking about a class of people who largely have retired.

Couldn't we look at investment income as a proxy for wealth? It has a couple of disadvantages: 1)it discourages investment by retirees v spending and 2)it's highly variable- does everyone get SS when the market tanks?
But it sounds better than the alternative, having to document all of your assets to qualify. If we use some sort of sliding scale (say, investment income for the past 5 years) that could iron out some of the fluctuations in the second objection (with some backdoor way of getting in, jic someone lost all of their income-producing assets eg investing in a ponzi scheme). The first part I don't think we can fix though.

[(The Original) Francis]

Carleton: Given the tremendous popularity of SS to the community currently and about to start receiving it (it's free money), the pressure on individual taxpayers to arrange their affairs so as to qualify will be immense.

Wage and investment income counts? Then don't have any wage or investment income -- it goes to a trust. Disbursements from a trust count? Then the trust makes distributions to your children, who then give you gifts. Gifts count? etc.

I suspect it's pretty easy to turn investment income into reductions in wealth if you're motivated to do so. I don't think you could structure any remotely fair means test that wasn't profoundly intrusive.

[OCSteve]

Wait.....Just because more tax revenue comes from the highest tax bracket doesn't necessarily mean its the most progressive tax system. If American high income earners earn far more than high income earners elsewhere, then of course they'll end up paying more, while still being taxed less. Given that the marginal tax rate in the UK is 40%....

Huh? You’re switching between revenue and earnings and tax rates with no connection.

???

Higher-income groups pay a disproportionate share of federal taxes because they earn a disproportionate share of pretax income and because effective tax rates rise with income. In 2006, the highest quintile earned 55.7% of pretax income and paid 69.3% of federal taxes, while the top 1% of households earned 18.8% of income and paid 28.3% of taxes. In all other quintiles, the share of federal taxes was less than the income share. The bottom quintile earned 3.9% of income and paid 0.8% of taxes, while the middle quintile earned 13.2% of income and paid 9.1% of taxes.

Seems to me that if you are paying 13.6% more of your share of taxes than the share of income you can account for that is progressive enough. For me anyway. YMMV.

Let’s hear opinions on the most regressive tax I’ve ever noticed (because it just surprised me at the checkout as I did not have enough cash) – another hefty tax on cigarettes just went into effect. Keep telling me how this is all to help out the poor while you (big D you) screw them with more and more regressive nanny taxes.

[Bernard Yomtov]

I think means-testing of retirees, whether wealth or income based, is an impractical idea. Francis points out some difficulties of using wealth, and I don't think that using investment income, as Carleton suggests, is going to work out either. Are you going to count unrealized capital gains, for example?

The fact is that retirees' financial situations do not fit easily into the pattern of those who, more or less, live on their labor income and accumulate and use assets for special purposes. There is a lot of variability. Consider, for example, the difference between owning a paid-for house and renting an apartment. Consider the differences in support available from adult children, or differing medical needs.

Of course, if you really want to means-test Social Security you can do it indirectly by lifting the cap. Wouldn't that be easier? The disproportion between contribution and benefits would still increase, just as it would under means-testing.

[Carleton Wu]

Wage and investment income counts? Then don't have any wage or investment income -- it goes to a trust. Disbursements from a trust count? Then the trust makes distributions to your children, who then give you gifts. Gifts count? etc.

Good point. But don't the same sort of limitations affect income taxes, estate taxes, and your proposed means test via wealth? That is, there is always a way around these things for the wealthy.
Although Im inclined to think that this is no so much a function of the wealthy hiring brilliant people to find loopholes, but of Congress always making sure that the necessary loopholes are in place beforehand.

[Nell]

Means testing for Social Security is a proposal made in order to set it up to be easily killed politically.

The framers of the system knew what they were doing: giving everyone a stake in order to prevent it becoming a marginalized "poor people's program". Protecting it from Republican snakes, in other words.

Von may or may not be a Republican, but on this issue he's a snake.

[Andrew]

I believe that inequality is less about tax rates, and more about who makes the rules which define the economy.

A week or so ago, I ran a quick correlation between between GINI Index and the level of collective bargaining coverage in 20 OECD nations. It is pretty telling.

[OCSteve]

Specifically…

Let’s see. In my case it went up .61 a pack or $6.10 a carton. My wife and I smoke on average 2 cartons per week. So, $48.50 per month.

That won’t cure our addiction. I’ve read that a nicotine addiction is stronger than heroin – no idea if it’s true as I stayed away from heroin. I can tell you all about nicotine though. Say, the time (#234) I tried to quit with the patch and ended up in the ER with heart palpitations.

So – it is a true addiction, and yuz guys mostly forgive that, or at least shift responsibility. So – I am not responsible for my addiction. Cool! Really cool!

Ya’ know what though – I can afford the increase. It is not coming out of the family food budget or rent. It’s discretionary income. And no matter how much it pisses me off, I can afford it.

I’ll bitch and moan. That’s what I am best at (free shot here). But in the end – it will not make me quit smoking.

The dudes that bum smokes off me in CC everyday? It’s going to hurt them a whole hell of a lot.

The family just getting buy, scraping the bottom, who now pays $48.50 more per month – yeah, you’re a big help there.

Taxing addiction is not going to help a damn thing. I am addicted. I can pay your damned tax. Many other addicts can not.

[Bernard Yomtov]

I believe that inequality is less about tax rates, and more about who makes the rules which define the economy.

As my mother was fond of saying:

Wer es halt die penne schreibt sich un ein guten jahr.

(Whoever holds the pen puts himself down for a good year.)

To forestall complaints from German speakers: This is my attempt to transliterate a Yiddish expression. While it's obviously extremely close to German, it's not the same thing.

[Nell]

@OCSteve: I'm completely horrified that the children's health insurance program is being funded by a tax that will be paid by addicts.

I'd happily see it ended, replaced by a health-care system that covers everyone. Like the one in S. 703.

[Mr Duncan]

Aww, OCSteve. I know what you mean. My crack dealer says volumes are down so he has to raise the price. I feel ya right here.

I'm gonna be a douche and tell you to man up and quit smoking. It's not hard, you just need to want to do it and to do it right. Read "The Easy Way to Stop Smoking" or if you've already read that, read "The Only Way to Stop Smoking Permanently". Chances are you won't go read them and you'll tell me you're a hopeless case, but if you ever feel like quitting, just remember that they're there.

And, when you quit, I won't even ask you to thank me.

[Randinho]

Even the "all-in" OECD figures cover only income-related taxes. They do not include state sales taxes.

A point which can't be understated. I lived in Alabama for several years, a classic example of a state with a regressive tax structure: low property taxes and sales tax on groceries and prescription drugs and OTC medicines.

[Randinho]

What Nell said at 10:03. Every word.

[Grover Gardner]

"Taxing addiction is not going to help a damn thing. I am addicted. I can pay your damned tax. Many other addicts can not."

I'm a smoker, and I say "scr*w you." Smoking is totally a choice. *Anyone* can stop. No one *needs* to spend $50 a month on cigarettes, any more than they *need* to spend $50 a month on ice cream or Pepsi.

What, are you like 150 years old and never heard that smoking is addictive?

[dmbeaster]

Yeah, it is already written upthread, but it makes my eyeballs bleed to read such nonsense about how "progressive" the current tax system allegedly is.

Under von's logic, a flat income tax that ended up collecting the same proportions of tax from the wealthy would be highly "progressive." And in fact, I suspect that the percentages listed would not change that much with a flat tax, since the current tax structure is the least progressive at any time in US history.

The real lesson here is that US culture has created greater class stratification than the other societies, resulting in a greater proportion of wealth (and taxes collected) being concentrated in the elites. To instead draw the conclusion that the structure is already highly progressive is innumeracy.

Finally, my experience as a business lawyer informs me that proper tax planning by the wealthy can significantly decrease their tax burden as a percentage of income through the wonderful magic of our tax code. Only that small fraction of the wealthy who derive their riches solely from very high personal service income feel the full bite.

[dan k]

This is really complicated stuff and has been debated many times before. See for example this post (accompanying data below):
http://lanekenworthy.net/2009/01/05/how-progressive-are-our-taxes

The bottom line is that in terms of dollars paid, the tax CODE ends up acting in a fairly progressive manner. Unfortunately tax burden (which is what all these studies measure) is not equal to tax INCIDENCE. Ask anyone who has owned a business (or is self-employed) how the employer "match" to FICA is calculated and you will see that this is an IMPLICIT tax charged to workers -- that's another 6.5% charged on 100% of your income if you make less than $100,000. Corporate taxes are also largely paid by workers, something that economists of all stripes can agree on (http://gregmankiw.blogspot.com/2006/08/who-pays-corporate-income-tax.html).

Federal / Federal/State/Local rates
Lowest quintile: 4.3 percent / 13%
Second quintile: 9.9 percent / 23%
Middle quintile: 14.2 percent / 28%
Fourth quintile: 17.4 percent / 31%
Percentiles 81-90: 20.3 percent / (Fifth quintile mean: 35%)
Percentiles 91-95: 22.4 percent/ (Fifth quintile mean: 35%)
Percentiles 96-99: 25.7 percent/ (Fifth quintile mean: 35%)
Percentiles 99.0-99.5: 29.7 percent/ (Fifth quintile mean: 35%)
Percentiles 99.5-99.9: 31.2 percent/ (Fifth quintile mean: 35%)
Percentiles 99.9-99.99: 32.1 percent/ (Fifth quintile mean: 35%)
Top 0.01 Percentile: 31.5 percent/ (Fifth quintile mean: 35%)

[Brett Bellmore]

"“Everyone in this chamber—Democrats and Republicans—will have to sacrifice some worthy priorities for which there are no dollars. And that includes me,”"

If he were going to be straight with the American people, he'd have said something like, "Everyone outside this chamber, Democrats and Republicans, will have to sacrifice some dollars for our priorities. Isn't it great to get to sacrifice other people's money instead of your own priorities?"

[Nathan]

Secondary question(repeating idea from other threads in the last few months): Complaining about the expansion in the size of government and then asking for a means test on Social Security is a contradiction.

IF there are new regulations restricting who gets Social Security, how do they get applied? Someone has to look at these individuals and see if they match the required standards. Even if that goes smoothly, there will have to be an appeals process(unless suddenly government can never make a mistake).

Unless huge numbers of people are cut off from benefits, this could easily RAISE the cost of the Social Security program.

[Bernard Yomtov]

Just to add to Nathan's comment, we are talking about lots of elderly people trying to deal with this. Remember the confusion over Medicare D? Think about how doing income taxes is a headache for so many, elderly or not.

And suppose someone is mistakenly denied benefits, and wins an appeal six months later. What are they supposed to live on for six months?

Means-testing for Social Security would be a disaster.

[glasnost]

Complete hogwash, von. Really. Surprising to see here. Go hunt down a chart of overall tax paid as percentage of total income - all federal, state, and local taxes combined - for every decile. The system is *barely* progressive - it ranges from about 28% to about 33%. There's a lot of room to grow taxes on the rich - heck, don't even raise rates, just start trimming loopholes.

And your perspective on debt is also - sorry to say it - anti-empirical. There's nothing unsustainable about Obama's budget whatsoever. In 2018 it might raise our debt-GDP ratio from 40 to 60%. That won't even put us in the top 50 countries. Japan's debt-to-GDP ratio is one hundred and eighty percent - and it has not defaulted, nor does it seem to be crushed under the strain.

The rules aren't the same for wealthy countries with powerful armies. Unfair, in our favor, but true.
Relax.

[Roq]

"*The fact that US income inequality has not only persisted but significantly increased (see OECD message re: US) in the face of a highly progressive income tax should suggest that maybe, just maybe, you cannot tax income inequality away."

...or maybe it's just indicative of the truly disgusting amounts of wealth we're talking about.