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September 19, 2010

Comments

Even with such a "small government", a head tax would probably not work.

Not for nothing, but a "head tax" at the federal level, where everybody pays some equal dollar amount, is explicitly unconstitutional.

Any tax regime you can imagine is going to be unfair to somebody, by some measure of fairness. It's likely to be unfair to everybody, but some number of measures of fairness.

Taxes suck. So does having to take out the trash, having to rake leaves in the fall, and not being able to eat ice cream for breakfast every day without getting fat.

Boo freaking hoo.

We live in a common polity, we expect the government to do certain things, so we have to pay for it.

For all sorts of reasons, many of them quite legitimate and defensible, we raise a lot of revenue through a progressive income tax regime.

The change under discussion is an *extremely minor tweak* to the existing regime, especially if considered in historical terms.

I'm sorry if Henderson has to mow his own lawn as a result, but life's a bitch.

Seriously, you'd think the czar's own minions were riding into town to seize everybody's first-born.

The tax cuts of the Bush years are going to sunset as planned, except for the ones that won't. Hopefully wealthy folks have enjoyed their near-decade of historically low rates, because they're going to be asked to pay historically-not-quite-as-low rates, so we can haul our sorry behinds out of the wringer.

If Henderson is living in Chicago, he probably has a pretty small lawn anyway. It'll take him 10 minutes.

Get a grip.

I'm sorry, but does Eric have some clearance level I'm not aware of?

Eric is a ninth-degree super wu li master, and as such is privy to information mere mortals can only dream of.

Be we don't really like to talk about that. First rule of ObWi and all that.

Jacob was referring to social welfare programs. It's his goal.

Er, no. I was talking about "social welfare" as a thing, welfare in the economic sense, not the policy sense. All "increasing social welfare" means is that people are happier and more secure. The mechanism could be (and in large part is) through changes and improvements in productivity in the private economy.

If you're going to argue tax policy I recommend learning the terms so that you don't mistake someone arguing that people should earn more and have more productive jobs for someone arguing that people should get more handouts. You should probably read a bit more closely too, and not jump to conclusions about the policies someone favors.

The only specific examples I gave were of the government hiring an (unspecified) expert worker, a maid getting access to higher education, and the government ensuring that 5 year olds get dinner. Not exactly "welfare" in the conventional sense.

In general I am not a big fan of transfer payments as an anti-poverty measure. Policies to support education and full employment are far more effective and productive. Some transfer payments are very important simply because children and the elderly will starve or go without vital medical care otherwise. It's no use exhorting 5 year olds to get a job even if jobs are available.

But for the most part I'm with Saint Ronnie (and various people before him): "The best social program is a job." Full employment solves a large number of problems.

dave, I don't have gov. overhead costs in front of me, but the US government is rarely known as a model for efficiency.
That's most likely because you never look. The overhead costs of private health care (see Thomson Reuters (October 2009) in the US (1999 data) totaled $294.3 billion or $1059 per capita vs. #307 per capita in Canada. That's roughly 31% of private health care. The overhead ratio for Medicare is under 6%, the VA is under 4%.

Further: “The data show that the United States spends more on healthcare than any other
country. However, on most measures of health services use, the United States is below
the OECD median. These facts suggest that the difference in spending is caused mostly
by higher prices for healthcare goods and services in the United States.”

The private health care system is really good at one thing: making money. Plus their overhead is a whole lot higher than the government's.

“””Well, we have this data””

yeah…that’s not data. That’s you saying stuff.

So, you think that people with higher incomes do not spend more of their incomes on investments versus consumption, compared to people of lower incomes?
Because if you're asking me to dig up data supporting something that obvious, I don't see that I need to spend time on a debate with you. Delaying by demanding verification of the obvious is not useful.

Yeah, this is off topic. My dream tax code is off topic, and would lead to a massive, massive tangent where we debate spending items

Then I suggest you stop saying that proposals that you disagree with are "unethical"- if you think they're poor from a practical standpoint, then make your stand there. Invoking ethics adds both a complexity and a moral aspect that I think is not useful at all.

I have raised a lot of issues in previous posts you have yet to address, and so I dislike the idea of just “skipping them” so we can talk about something new.

The reason that I brought up the 'morality of taxation' issue is that none of your objections so far are aimed at specific tax proposals- they can be used against any level of income taxation. So I ask- are you entirely opposed to income tax, or taxes in general- or just to the current proposal to allow the lowered rates to lapse back to the Clinton-era rates?
I ask that not to bypass whatever points you believe you've made, but because I cannot effectively respond until I know what Im debating- am I debating the existence of an income tax or taxes in general, or the specific proposal at hand?

That's nice Tom. And average spending per student in public schools ranges between 10k and 27k dollars, depending on the demographic area. http://www.cato.org/pub_display.php?pub_id=11432

for every example of government "efficiency" you find, I can give an example of massive government inefficiency. Governments have a host of policies in place that prevent them from saving money the same way the private sector does. it's no contest.

Jacob,

I saw what you wrote. You implied that you wanted to eliminate poverty and education gaps via tax policy. you didn't specify how. You can't blame me for assuming you meant income redistribution, when you didn't specify.

And...i'm done. I'm tired of individuals ignoring the points I make, in favor of insulting me as a person. Time and again, this blog shows the true character of the people who participate in it.

I can give an example of massive government inefficiency

The private sector just produced a $5,000,000,000,000 housing bubble that burst, dumped perhaps a trillion dollars in costs on the government, pushed unemployment to 10%, and produced nothing but a lot of houses in really impractical places.

Forgive me if I'm not impressed with a paean to private efficiency right now. The truth is both government and private industry can be efficient or inefficient depending on what they're trying to do and how people feel about it.

And...i'm done.

Watch out for that door, it's a killer.

nd having a maid is very much a part of 2 earner families, particularly if they have kids or, as my wife and I do, 12 plus hour days.

Ay, carumba. I don't even know where to start here, except to say that perhaps in the business-owning circles McKinney runs in this is true, but in the two-earner circles I have run in in my life, this isn't anywhere close to true.

And average spending per student in public schools ranges between 10k and 27k dollars, depending on the demographic area....
for every example of government "efficiency" you find, I can give an example of massive government inefficiency. Governments have a host of policies in place that prevent them from saving money the same way the private sector does. it's no contest.

Are private schools much more efficient? The local private elementary school here has a tuition around 13k. The private school I went to when I was younger was fairly expensive as well- and received quite a bit of money from endowments etc that wouldn't show up in tuition prices.

Apples: not only tasty, but also useful to compare to other apples. Oranges: tasty, but not good for comparing to apples.

And...i'm done. I'm tired of individuals ignoring the points I make, in favor of insulting me as a person. Time and again, this blog shows the true character of the people who participate in it.

Aww. Now I am all sad and stuff, I take back the part where I asked you to explain how your argument addressed the matter at hand rather than all taxation in general. I mean, I take that back if that's the part where I ignored the points you were making and insulted you as a person. Although, for the record, Im not sure what else I could insult you as, should I desire to do so.

Guys, does anyone here actually think that just letting the Bush tax cuts on the top tax bracket expire will fix the federal deficit? If you think that, some people from Nigeria have a business opportunity for you. If you don't think that, then why do you waste time on this insane squabbling about who has more right to decide where money gets spent? Yes, McKinney in Texas, you do, collectively, have to pay your debts, sooner or later. I see absolutely no way you can do that without raising taxes. It seems to me that makes any discussion of the equity of increased taxation moot. As in a waste of time, nothing to argue about, let's all move on: we can discuss who should pay, and whether, or how much to cut spending and where. But no even marginally responsible government can renew the Bush tax cuts for everyone.

'Mine. Education is a social investment worth making. We should pay for it. Educated workers are more productive and as someone who wishes to live in a more productive, more broadly affluent society, I think it's worthwhile. I favor raising the marginal income tax rate on a significant portion of my income by a significant amount (like 10-15%).'

Jacob, are you sure you want to be taxed for the spending that frequently will yield no or marginal productivity improvement. Part of the discussion here includes the high costs of education and many Americans have recently (particularly in our current economy) begun serious cost-benefit analyses of higher education. IMHO, citizens bearing direct responsibility for their education (with publicly funded education available to maintain universal civic functionality) will result in better decisions for education spending than placing that responsibility in the hands of bureaucrats.

"Having a maid is very much a part of 2 earner families."

Wrong. Most 2-earner families do not have maids.

McKinney, if you really do think what you wrote made any sense at all, then Americans shouldn't be debating progressive income taxes. Instead they should debating whether or not to physically liquidate their bourgeoisie.

Dave,

Thanks for countering my point by not addressing it, and instead labeling me with an evil word, comrade. Whether or not you think I'm genuinely concerned about chefs is completely irrelevant to the argument. And does nothing to address my point, that anyone who proposes a policy that effects people's lives significantly, has an obligation to prove that they have examined its ramifications thoroughly.

That's Mr. Comrade to you, Dave.

One: This minor change in tax legislation is not a "major" change to the good professors standard of living.

Two: You are the one continually harping about the alleged 'choice' Henderson will have to make about keeping his chef or....what? You are the one who claims this is some kind of 'moral choice'. You throw assertions as easily as some restaraunt workers throw pizzas.

At the margin, Henderson has many choices. He could 'cut back' on many things. For all I know, he could divorce his wife and join a monastary because to him the added tax just "took him around the bend". How the f*ck are we supposed to know? Simply put, we do not. Polling Henderson's neighbors will not reveal the answer.

But again, this is not a 'moral choice'. It is a social decision about how we split up the pie. For example, I decry vast disparaties of wealth. This may of may not be 'immoral', but it is social feather bedding, favoratism, the powerful abetting the powerful, socially destructive, and frankly, pretty stupid.

Three: Most here, despite all the back and forth are totally mystified at whatever point it is you are making. Perhaps you could provide an example. I'll even give you one to tackle: The US has built, at taxpayer expense, a huge, military establishment. Please comment on that fact in light of your oft repeated concerns about "choices".

Perhaps you will enlighten us.

Somehow I doubt it.

GOB,
I think it actually makes sense for the gubmint to subsidize education for two basic reasons (beyond, as you say, civic functionality):
1)It increases social mobility, thus producing more of a meritocracy. This is both directly beneficial (allowing bright children of poor or uncaring parents to attend college and contribute their gifts to society) and indirectly beneficial insofar as meritocracy increases the perception of fairness in a society.
2)Because the government will be taxing the future income of the population, it is in the financial interest of the state that the population be well-educated. If I have a choice of working for 40k or becoming better educated and earning 60k (5k of which will be taxed), then I see 15k/yr of added value from education- and the government sees 5k of added value. So it makes sense for the government to subsidize the latter choice- and that added 5k is over the working livespan of the educated worker- so it could be more like 200k over 40 years or so (complexities such as time value of money ignored for convenience).

And does nothing to address my point, that anyone who proposes a policy that effects people's lives significantly, has an obligation to prove that they have examined its ramifications thoroughly.

Just wondering- how does this not apply to tax cuts? In this particular case, what's being debated is whether we should pass a new law permanently lowering taxes. This creates all manner of impacts, from the strength of the dollar to interest rates to the burden of borrowing on future generations to possible cuts in federal programs. Are all of those ramifications exempt from the requirement that proponents examine them thoroughly because it's a tax cut rather than a tax hike?

Most 2-earner families do not have maids.

We have, at times, had someone come in every week for a half day and clean like crazy.

At other times, it's been every two weeks. Just now we don't have anyone, because we're only about a 1.15-earner family. We haven't had a maid service in to clean for maybe two years.

I consider the employment of others to be a good thing. But if we can't justify the expense, we don't do it.

It's fairly straightforward.

I guess it's worth mentioning that at peak, we made less than half of what the good professor's household made, and right now we're more like a third, total.

We also have a kid come do our yard every week, and the guy across the street does things like rips our office down to the block walls, seals, and rebuilds.

All of these are good things, no?

As usual, Krugman says it best:

But 30 years ago people with high but not super-high incomes generally felt ashamed of themselves for griping — or at least, felt that they would be ridiculed if they gave voice to their gripes. Today, all restraints are off. The fuss over Messrs. Henderson and Stein is the exception that proves the rule: they wouldn’t be providing this spectacle if they didn’t normally swim in social circles where complaining that you only have 9 or 10 times median family income is considered totally acceptable.

Pretty soon, we’ll be having serious, completely un-self-conscious discussions in major magazines about the servant problem.

-Have You Left No Sense Of Decency?

It appears that Mr. Henderson has deleted the post that started this discussion.

Mr. DeLing has grabbed it from Google's cache and reposted it at his own site under the title "We are the Super Rich", along with other choice selections from Mr. Henderson's writings.

Representative examples:

I’ve read and enjoyed all of Ayn Rand’s fiction, especially “We the Living,” but I’ve always wondered how I can convey her ideas to my children before they are able to read the books for themselves. What is a Randian to do when the hippies at the local playground sermonize about sharing and winning not mattering?


Have you ever been tempted to buy a beggar a cup of coffee or a sandwich instead of giving money? If so, you have, like a young Anakin Skywalker, taken your first step to the dark side of altruism
...
the dark side of caring is the perversity of this control. Once we start thinking this way, the creep towards totalitarian nannyism is hard to resist...

I’ve read and enjoyed all of Ayn Rand’s fiction, especially “We the Living,” but I’ve always wondered how I can convey her ideas to my children before they are able to read the books for themselves.

That is the scariest thing I have read in some time- let's make sure the kids are firmly entrenched sociopaths before books or hippies any of them get to thinking that empathy and kindness are admirably qualities.

Of course, the most obvious ways of explaining Randroid thinking to children: act selfishly around them. Don't cook for them, but them stuff, or even bother to keep them out of traffic- they will quickly learn that they need to look out for number one and screw everyone else.

We have, at times, had someone come in every week for a half day and clean like crazy.

I think of a maid as someone whose sole job is to clean a house or a small set of houses, but usually for only one employer. What is described above is more of a 'cleaning lady'. Perhaps this is just a class thing, when my mom was having more and more trouble getting around, she did the same, so maybe I'm resistant to the label, but it seems to me that 'a maid', carries a kind of contractual weight. This might just be a quirk of my own mental lexicon, so I wonder what views others might have.

"It is not the case that spending has grown out of control and we're forced to raise taxes to compensate. Taxes have been cut, spending stayed the same,..."

All of these are good things, no?

They're all fine things.

An economy where a large portion of employed people do handy and convenient but non-essential services for wealthy people, who in turn derive their income not from productive work but from financial shenanigans, not so good.

The basis of wealth is the creation of real value. Convenience is nice, but it's not really a basis for national prosperity.

Gwynne Dyer once remarked on the lack of seriousness in American political discussion by observing that Americans described terrorist organization using terms that could just as well have applied to the villains in Buffy the Vampire Slayer. Now you discuss the looming fiscal crisis in terms of the affordability of a maid.

I claim no expertise on economics, but I know this: you don't live in Greece. Nobody in the world has the economic power to bail the US out of a real economic catastrophe. And if you don't change the way you approach taxation and government debt, you will reach a point at which you can no longer avoid a really painful reckoning. If it comes to that, to a serious slide in the US dollar and a corresponding spike in the price of imported oil, if you end up with double digit interest rates and double digit unemployment, then maids will rank pretty far down on your list of worries. And I, for one, will take no pleasure in any of it.

"Time and again, this blog shows the true character of the people who participate in it."

Cool.

Hey, BTW, McKinneyTX, the Democrats tried to help you out on that 1099 issue, raising the reporting requirements from $600 to $5,000, but the Republicans filibustered them. Too bad about that. Might want to reconsider your voting patterns.

I'm not saying everyone who doesn't use emoticons is a tzadik nistar. But I do believe that everyone who is a tzadik nistar does not use emoticons.

Back at you.

We live in a common polity, we expect the government to do certain things, so we have to pay for it.

Agreed, but this is one half of the equation, the other being: how much is gov't going to spend? Is there any limit?

Yes, McKinney in Texas, you do, collectively, have to pay your debts, sooner or later. I see absolutely no way you can do that without raising taxes. It seems to me that makes any discussion of the equity of increased taxation moot. As in a waste of time, nothing to argue about, let's all move on: we can discuss who should pay, and whether, or how much to cut spending and where. But no even marginally responsible government can renew the Bush tax cuts for everyone.

It depends on how you frame the discussion. If half, or more than half, of the country insists that we talk about spending cuts as a precondition to tax increases, and if taxes are increased, not to spend more, but to reduce debt, that is one thing. If, however, the proposition is: raise taxes and we'll talk about cuts some other time, someday, maybe, whenever, then no, discussing who pays what is not moot.

except to say that perhaps in the business-owning circles McKinney runs in this is true, but in the two-earner circles I have run in in my life, this isn't anywhere close to true.

So, we've covered two out of thousands, if not hundreds of thousands, of circles. FWIW, I use my immediate social circle as a template very rarely. The circles I am referring to is a reasonably representative swath of suburbanites whose family incomes are in the 80-140K range. About half hire a maid once a week, as do my wife and I.

McKinney, if you really do think what you wrote made any sense at all, then Americans shouldn't be debating progressive income taxes. Instead they should debating whether or not to physically liquidate their bourgeoisie.

You think having a maid in once a week is a sign of social breakdown? Seriously?

It is a social decision about how we split up the pie. For example, I decry vast disparaties of wealth.

This assumes the pie is yours or anyone else's to split. Many of us are content for the the pie to split itself.

What is described above is more of a 'cleaning lady'.

We may well have a definitional issue here. I have no particular problem with hiring someone full time. It's not in our budget and whoever we hired would run out of things to do after the first 3 hours or so.

Hey, BTW, McKinneyTX, the Democrats tried to help you out on that 1099 issue, raising the reporting requirements from $600 to $5,000, but the Republicans filibustered them. Too bad about that. Might want to reconsider your voting patterns.

I am aware of this. However, it was the Dems who stuck that rabbit in the hat in the first place. And they didn't just vote to repeal it. They replaced the future revenue with additional charges to the energy industry. The Repubs wanted to replace the income by watering down the mandate and other aspects of HCR.

My voting patterns are a split ticket. Pretty much always has been that way. I sent money to Bill White last week. He's a Democrat running for governor.

My mother used a service called Merry Maids. (Barbara Ehrenreich worked briefly for a different one of their franchises; see Nickel and Dimed.) They were pleasant enough (much more so than I am when doing the same work), but I wouldn't have called them merry, so maybe they weren't maids either.

McTX -- You think having a maid in once a week is a sign of social breakdown? Seriously?

Can't speak for Roland, but I'd say it's more that someone is complaining about the prospect of having to let his maid go in a time when a lot of people are worried about losing their houses, getting laid off, and being able to feed their families, and he's acting as if his discomfort is in any way commensurate.

I don't care that he has a maid and sends his kids to a private school, but those things aren't even a blip compared to the choices that the people below him on the tax codes are facing. He's in serious Marie Antoinette territory with his failure to grasp the plight of the plebs.

"It is not the case that spending has grown out of control and we're forced to raise taxes to compensate. Taxes have been cut, spending stayed the same,..."

Charles
1)you cut off the part of the sentence where I explain that we've spent a lot in the past year or two fighting the recession- which is exactly what you're graph shows. TARP and the stimulus were one-time expenditures.
2)Not sure why someone would compress this data into decades, especially when we're concerned about that last year or so. Seems sort of misleading.

Agreed, but this is one half of the equation, the other being: how much is gov't going to spend? Is there any limit?

Again, your rhetoric is that of someone faced with taxes which stayed the same while spending rose unsustainably. The reality is that taxes have been cut while- other than spending on wars and fighting recessions- things have remained close to the same as a % of GDP.

If, however, the proposition is: raise taxes and we'll talk about cuts some other time, someday, maybe, whenever, then no, discussing who pays what is not moot.

I dont have a problem with discussing spending cuts, but I dont see why the two conversations need to be linked- I mean, in general the spending that we're willing to undertake should be linked to the taxes we're willing to bear. Spending should be wise. But in the face of the expiration of seemingly unwise, budget-busting tax cuts, why must we also necessarily discuss spending cuts?
Here is a nice little graph showing the deficit in relation to the Bush tax cuts, wars, and the economic downturn- without those factors, the deficit would be close to zero though 2020. Now, we could also balance the budget by massive spending cuts- but there's no reason to take the stance that raising taxes back to their 90s levels is some onerous innovation which must be balanced with spending cuts.

This assumes the pie is yours or anyone else's to split. Many of us are content for the the pie to split itself.

This is surely a tangent, but it's always seemed odd to me that certain libertarian types regard their favored socioeconomic structures as some sort of default.

>"what is the theory under which collecting this money in taxes and deciding in Washington how to spend it is superior to our decisions?"

Um, representative democracy?

@McKinney in Texas: This reminds me of two people in a car, heading for a brick wall at a buck sixty (in US terms, a hundred miles an hour), one screaming "step on the brake!" and the other yelling "take your foot off the gas!" The question of who should do what first has less relevance than the fact that if one of them doesn't do something, they will both end up in a very bad situation indeed.

If you think I have exaggerated the problem, according to the US national debt clock, you have a public debt to GDP ratio of 62% and a deficit of over a trillion dollars a year. A very large chunk of your government expenses consist of programs like social security, for which the recipients have paid taxes in advance, and as I review your expenditures, I cannot think of any cuts significant enough to both bring your deficit under control while extending the Bush tax cuts, and possible to implement under current political circumstances.

So while I applaud all efforts to eliminate unnecessary expenditures in government, I also have to say that if you want to avoid a very hard landing in the future, you have to take a responsible attitude to the situation you find yourselves in today.

The question of who should do what first has less relevance than the fact that if one of them doesn't do something, they will both end up in a very bad situation indeed.

With respect, I disagree. Our situation is this: You and others are saying to me and others: we want more of your money. The response I am making is: well, maybe, but first tell me what you want to spend it on. I say further: if you aren't going to do a better job with what you get than you've done in the past, why give you more?

If I can give it a try:

The response I am making is: well, maybe, but first tell me what you want to spend it on.

Pretty much the same stuff minus the wars, some stupid subsidies and jailing people for weed.

I say further: if you aren't going to do a better job with what you get than you've done in the past, why give you more?

See above. I think that would be doing better.

McK: "It depends on how you frame the discussion. If half, or more than half, of the country insists that we talk about spending cuts as a precondition to tax increases, and if taxes are increased, not to spend more, but to reduce debt, that is one thing. If, however, the proposition is: raise taxes and we'll talk about cuts some other time, someday, maybe, whenever, then no, discussing who pays what is not moot. "

I could do the "replace words to completely turn the sentence back around" thing, but I won't, I'll just point out that the discussion isn't "half or more than half the country insisting on spending cuts before tax increases," it's "Republicans talking only about tax cuts, no matter what the situation is." As Matt Yglesias keeps pointing out, Republicans don't care about the deficit. They care about tax cuts, and use the deficit as a tool to try and keep Democrats from being able to do anything, but once they get into power, they stop caring about paying for stuff and go straight to tax cuts for the rich.

@McKinney: Let's look at where the money at issue goes. Your country has a number of major spending programs. Two of them, Medicare and Social Security, transfer money to people who have already paid into them. One of them, the military (including the cost of the wars) enjoys broad support, and would take some time to wind down anyway. The last, debt servicing, you really don't have a choice about. Taken together, these programs cost more than your government currently receives in revenues.

You can argue about how much to increase taxes, and how and whether to reduce the overall size of government. But the money at issue here doesn't exactly count as yours: your government has already pledged it, with your effective permission as a citizen of a democracy. To do less simply dumps the problem onto your children. Someone has to balance the budget and at least make a start on paying down the debt. What conceivable reason can you give for not making that person you, and the generation that does it yours?

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