The White House released its one-page summary "tax reform" proposal today. MarketWatch has the full text.
The proposal calls for the standard deduction to be doubled.
In my opinion that's a good thing and kinda sorta in the spirit of The MITE. More on that below.
The rest of the stuff is, at best, orthogonal to The MITE proposals and there may be some real poison pill stuff in there.
For example, Trump proposes reducing the current seven tax brackets (10%, 15%, 25%, 28%, 33%, 35% and 39.6%) to three (10%, 25% and 35%). That's cool from a simplification standpoint, and of course the current top-bracket taxpayers are going to like it. But how many of the current 15% payers are going to get at least some of their income pushed up into the 25% bracket rather than down to the 10%? Ditto current 28% or 33% income falling into the 35% bracket instead of the 25% bracket? Devil, meet details.
A quick read of the proposal indicates that it is shaped, to a high degree, by a weird combination of protectionist macho flash and supply side voodoo. I'm not particularly impressed. But anything that lowers taxes in general is, in my opinion, a move in the right direction. And at least the idiotic "Fair" Tax didn't make it into the proposal. So anyway ...
Increasing the Standard Deduction vs. Increasing the Personal Exemption
I favor increasing the personal exemption because doing so leaves room for individuals to lower their taxes even more with itemized deductions. Raising the standard deduction instead of the personal exemption decreases such opportunities. Not all MITE supporters agree with me on that -- personal exemption versus standard deduction was a matter of debate when we put together the project.
As a practical matter, though, most of the people at the lowest income levels don't itemize even at the current standard deduction level -- they don't have a lot of money to spend on specifically deductible things like charitable contributions and home mortgage interest in amounts that would come to more than the standard deduction. So increasing the standard deduction, which they were going to go with anyway, does fulfill part of The MITE agenda of "bottom-up tax cuts."
On the other hand, this seems to be a one-shot plan, rather than a proposal for continuous tax-cutting. Like certain categories of spending, increasing the income tax liability floor should become "non-discretionary" -- that is, either the personal exemption or the standard deduction should go up every year, substantially and automatically, unless Congress specifically acts to stop the process. That way we don't have to fight over that particular tax-cutting methodology every year. It just happens.
Also, the administration's proposal does not address the heavily regressive FICA taxes with a "floor" so that poor males of color can stop subsidizing the retirement and health care costs of wealthy white women. That should be a priority.
Of course, today's summary is just a first shot across the "tax reform" bow. The administration will be hitting Congress with more specifics soon -- and Congress will be hitting right back. So if affecting policy by lobbying politicians is your kind of thing, it's time to call your congresscritters.
Showing posts with label taxes. Show all posts
Showing posts with label taxes. Show all posts
Wednesday, April 26, 2017
Thursday, July 14, 2016
They Say It Like It's a Bad Thing (and Throw in Fallacious Possessives, Too)
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| Photo: Wikipedia |
Per the Washington Post, according to the US government, this means that he owes it money.
The United States is one of the only countries in the world that taxes the income of its citizens no matter where they live — and Johnson owed a hefty bill.
In his 2014 interview on the Diane Rehm show, Johnson said he was supposed to pay capital gains tax to the IRS after the sale of his home. The Telegraph reported the property was likely a home in North London that he bought with his wife in 1999 for 470,000 pounds. They sold it in 2009 for 1.2 million pounds, realizing a gain of 730,000 pounds.
In Britain, profits on the sale of a first home are exempt. But because Johnson was still a U.S. citizen, his tax liability was in the ballpark of about 100,000 pounds, according to tax experts. Johnson declared in 2014 that he would not pay the outstanding bill.
"It's absolutely outrageous," he said of the amount. "Why should I?"
Well, it's not really the amount that's outrageous. It's the idea that Johnson "owes" the US government anything at all. Even if taxation wasn't theft -- and yes, taxation is theft -- he neither lives nor works in the US nor do I see any mention in the story of him owning property in the US. What is there for him to pay taxes on, except possibly sales taxes on purchases he makes when visiting the US?
The US regime's claim is that since Johnson was born in the US, he's a "citizen;" that until and unless he renounces his "citizenship," it's owed a cut of everything he earns; and that when and if he does renounce his "citizenship" it ought to get an "exit tax" (which, the Post notes, could come to more than a million bucks).
I suspect that Johnson could lay down a great line of flowery British invective on the subject. Since I'm an American, I'll keep my summary to three words: Fuck that noise.
But beyond the issue itself, a pet peeve:
The Post story refers to "his tax liability" and "his taxes" and states as fact that Johnson "owed a hefty bill."
Those expressions beg the question. That is, they assume the conclusion being argued: That a demand on the part of the US government constitutes an obligation on the part of the demandee (in this case, Boris Johnson).
Again: Fuck that noise.
Tuesday, March 05, 2013
That Ol' "As a Percentage of GDP" Dodge ...
The Congressional Budget Office projects that in 2013, federal tax revenues will reach an all-time high of $2.7 trillion.
The folks at FactCheck.Org have a quibble, though:
"Provid[ing] services to twice the people," as in Williams's example, does not necessarily mean providing twice the services, nor does it necessarily mean twice the cost. As a matter of fact, it almost certainly means neither.
Just because the population got bigger, that doesn't mean the borders got any longer or that they cost any more in man-hours or equipment to "secure."
It also doesn't mean the armed forces had to get bigger or have more planes, tanks, guns or bombs. Nobody else's borders got any longer, or their territory any larger, either. The oceans are still the same size, too -- it takes exactly as many Carrier Strike Groups to patrol them as it did before.
And if the population of Unfriendlystan got bigger too, so what? A 10-megaton nuke (just for example) will kill 98% of the people unlucky enough to be living within its 13-mile blast radius. It doesn't care if there are 10,000 of them or 100,000 of them.
Even in the areas where costs do rise, they probably don't double. Does the phrase "economies of scale" ring any bells?
So the government is sending out twice as many Social Security payments, yeah, and the total cost of the payments themselves doubled, true, but the administration shouldn't cost anything like twice as much. So they had to stick another computer in the SSA building to run more direct deposit routines. That doesn't mean they had to double their work force, or build a new building twice the size, etc.
Yellowstone and Yosemite will be the same size next year as they were last year. It doesn't take twice the staff to usher twice the number of visitors through the gates. If there are 100 people standing by to watch Old Faithful erupt today, it takes the same single tour guide to give the lecture as it took when there were 50 people there a year ago today. Yeah, they may need a larger maintenance and cleanup crew, but not double (twice as much trash may have to be picked up, but that there shrub doesn't have to be trimmed twice as often).
There will still be 435 US Representatives, not 870, and 100 Senators, not 200, and they will still operate in one Capitol building, not two. There will still be one President and White House, one Vice-President and Naval Observatory, and so on, and so forth.
Just because the population of my household -- or the income they earn -- doubles, that doesn't mean the costs have to. Sure, they'll go up, but they won't double. It costs the same amount to light the living room for the evening with two people in it as it does with one. The rent or house payment doesn't change, nor does the cable bill or the phone bill unless we just really want an extra phone line or more DVRs or something. It costs the same amount to mow the yard or have it mowed (if we mow it ourselves, though, there are twice as many people to split the work -- more leisure for all!). I may spend more on food, but I'll probably spend about the same amount to refrigerate that food until I cook it, and the same amount on or electricity to cook it with, and less than double the amount of water on washing dishes, doing laundry, etc.
Trying to calculate taxes "as a percentage of GDP" is 100% pure Grade A horseapples.
The folks at FactCheck.Org have a quibble, though:
Bob Williams of the nonpartisan Tax Policy Center said it doesn’t make much sense to talk about revenues only in nominal dollars. That doesn't account for growth in population, inflation or the growth of the economy. Say, for example, the population doubled, Williams said. You would expect the amount of revenues to double as well. So revenues would increase without the need to raise tax rates. But spending would have to go up to provide services to twice as many people.
"Provid[ing] services to twice the people," as in Williams's example, does not necessarily mean providing twice the services, nor does it necessarily mean twice the cost. As a matter of fact, it almost certainly means neither.
Just because the population got bigger, that doesn't mean the borders got any longer or that they cost any more in man-hours or equipment to "secure."
It also doesn't mean the armed forces had to get bigger or have more planes, tanks, guns or bombs. Nobody else's borders got any longer, or their territory any larger, either. The oceans are still the same size, too -- it takes exactly as many Carrier Strike Groups to patrol them as it did before.
And if the population of Unfriendlystan got bigger too, so what? A 10-megaton nuke (just for example) will kill 98% of the people unlucky enough to be living within its 13-mile blast radius. It doesn't care if there are 10,000 of them or 100,000 of them.
Even in the areas where costs do rise, they probably don't double. Does the phrase "economies of scale" ring any bells?
So the government is sending out twice as many Social Security payments, yeah, and the total cost of the payments themselves doubled, true, but the administration shouldn't cost anything like twice as much. So they had to stick another computer in the SSA building to run more direct deposit routines. That doesn't mean they had to double their work force, or build a new building twice the size, etc.
Yellowstone and Yosemite will be the same size next year as they were last year. It doesn't take twice the staff to usher twice the number of visitors through the gates. If there are 100 people standing by to watch Old Faithful erupt today, it takes the same single tour guide to give the lecture as it took when there were 50 people there a year ago today. Yeah, they may need a larger maintenance and cleanup crew, but not double (twice as much trash may have to be picked up, but that there shrub doesn't have to be trimmed twice as often).
There will still be 435 US Representatives, not 870, and 100 Senators, not 200, and they will still operate in one Capitol building, not two. There will still be one President and White House, one Vice-President and Naval Observatory, and so on, and so forth.
Just because the population of my household -- or the income they earn -- doubles, that doesn't mean the costs have to. Sure, they'll go up, but they won't double. It costs the same amount to light the living room for the evening with two people in it as it does with one. The rent or house payment doesn't change, nor does the cable bill or the phone bill unless we just really want an extra phone line or more DVRs or something. It costs the same amount to mow the yard or have it mowed (if we mow it ourselves, though, there are twice as many people to split the work -- more leisure for all!). I may spend more on food, but I'll probably spend about the same amount to refrigerate that food until I cook it, and the same amount on or electricity to cook it with, and less than double the amount of water on washing dishes, doing laundry, etc.
Trying to calculate taxes "as a percentage of GDP" is 100% pure Grade A horseapples.
Friday, November 09, 2012
The Ask Before Us
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| (Photo credit: 401(K) 2012) |
No he doesn't. That's a bare-faced lie.
The government doesn't "ask" for taxes from anyone.
They're taxes. They're not requested. They're collected pursuant to demands backed by forcible seizure and possible criminal penalties in cases of non-compliance.
If you support taxing "the rich" -- or anyone else -- at least be honest about what that involves.
If you want to argue that taxes aren't theft, i.e. that they are morally acceptable pursuant to some kind of binding "social contract" or whatever, feel free, but even in that case nobody's "asking." Collecting remains a coercive process (i.e. one backed by force or threat of force) whether or not it is an immorally aggressive process (i.e. one that violates a victim's rights).
Wednesday, October 21, 2009
A modest proposal for a move to the left
The "Laffer Curve" first came to public prominence back in the heyday of Reaganomics and "supply side" ideas. The concept is simple and, once you think about it, obvious (I say "once you think about it," because even though it's been around since the 14th century, it took Arthur Laffer to get people thinking about it).What the Laffer Curve tells us is that the "optimal" tax rate t -- the rate which will produce the most revenue for government -- is less than 100%. There's a tipping point in tax rates beyond which people work less and produce less, creating less wealth to tax, than they otherwise would have. This is because they're not keeping as much of what they earn, making the earning of it less attractive. If the tax rate is x%, you get out of bed and go to work even if you have the flu; if the tax rate is x%+1, you take a sick day if you wake up with the sniffles, or maybe you pad your week of paid vacation out with a couple of unpaid days off on either side. The Laffer Curve treats that in the aggregate -- everyone's "tipping point" can be different, but there's still an overall tipping point at which increasing taxes would decrease, rather than increase, government revenues and vice versa.
One problem with the Laffer Curve as illustrated: 100% taxation would probably not produce zero government revenue. Even in the most complete state socialist system -- a system where every dime you earn goes to the government, which doles part of it back out to you in "benefits" -- some people would continue working right up to the minute the system was overthrown.
Anyway, here's the thing: Reaganites and other "conservative" politicians love the Laffer Curve because it allows them to promise tax cuts and maintenance of the welfare state. That's been the mantra since the 1980s: "We can cut taxes and still grow the federal budget -- our revenues will go up, not down, because we're on the right side of the Laffer Curve!" This is a great way to sell tax cuts (and the politicians who promise them) to those who are directly employed by government or who depend on a government check, a government contract, etc. for their livings.
BUT!
Reducing the size, scope and power of government is a worthwhile end aside from the issue of how heavy the tax burden is. Increased government revenues are a bad thing, because most of what government gets up to is mischief of one sort or another.
More government revenue means more drug warriors prowling the streets and locking people up for possession of unapproved plants.
More government revenue means more education bureaucrats sending more money to more "public" schools to teach our sons and daughters how to not read, not do math, not learn science and not know history.
More government revenue means more "national greatness" idiots sending more troops to far-off places to prove how big America's penis is.
More government revenue means more money coming out of your pockets and flowing into the bank accounts of the various privileged elites who lobby Congress for subsidies, protections and other favors.
More government revenue means more government.
So, when someone tells me that a tax cut will enhance government revenues, my reaction is "the tax cut you're proposing isn't big enough." There may even be a point at which a tax cut which keeps the rate to the right of the Laffer Curve's t is a bad idea because the evils the enhanced government revenue will pay for outweigh the evil of the marginally higher taxes themselves. I don't see that point as calculable, so it's not worth belaboring, but it seems theoretically likely.
Setting aside the possibility of abolishing taxation entirely (a worthy goal!), the least we can do is work to get taxation over to the left side of the Laffer Curve -- to the point where politicians who want to grow government have to try to sell the public on a tax increase to pay for that growth, instead of being able to have it both ways.
How do we know that we're to the left of t? Once again, there's that calculation problem -- this isn't a zero sum game, since tax cuts feed money back into the economy and strengthen it. The best we can do (as long as we insist on keeping government around, anyway) is cut taxes and then cut taxes, and then cut taxes some more, while keeping an eye on government revenues to see when they start going down (and then keeping an eye on them after that, too -- t will probably move downward as lower taxes improve the economy, making more people more prosperous and thus more able to say "screw it, I'm taking the day off -- government would just take x% of what I earned anyway").
My income tax cut proposal (in lieu of repeal of the tax until we can get that) is for a regular, annual increases to the personal exemption. Tying that into a project to get us onto the left side of the Laffer Curve would entail reviewing the results of the increased exemption each year. Did government revenues go up, or did they go down? If they went up, then the exemption needs to be increased even more. If they went down, hey, we're on the left side of t! We're actually cutting government, not just taxes! At that point, some will argue that it's time to stop cutting taxes. But (I say, with a cryptic politician's smile) let's cross that bridge when we come to it.
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"Laffer Curve" image from Wikimedia Commons, published by Vanessaezekowitz under the terms of the Gnu Free Documentation License.
Thursday, July 02, 2009
What's good for the goose ...
Sez the Lost Angeles Times:
At the very least, if an employee brings one of these "Governator Owes You" notes to work, the employer should cease state income tax withholding for that employee, cut a full paycheck until the amount is covered, and send Sacramento the IOU in lieu of withholding receipts.
Another option would be for those owed tax refunds to get together, pool their IOUs, and sell them for a portion of face value to, say, Peter Milano or Frank "Skinny" Velotta. A few broken legs ("I fell down the stairs -- really, I did!") in the Senate and an unexplained disappearance or two in the Assembly would probably clear the matter right up.
Full-scale tax revolt would be better, though. Imagine if next week, instead of checks and wire transfers from California employers representing all that state income tax withholding, Sacramento got a boatload of notices: "When you get your act together, let us know; at that point we'll re-evaluate your credit rating and consider sending you money again. Maybe."
With budget negotiators at a loggerheads and California government facing a cash crisis, the state controller's office will start printing IOUs this afternoon for the first time in 17 years.
The presses are set to start at 2 p.m., churning out 28,742 IOUs worth $53.3 million that will be dispatched mostly to residents throughout the state still awaiting their income-tax refunds.
At the very least, if an employee brings one of these "Governator Owes You" notes to work, the employer should cease state income tax withholding for that employee, cut a full paycheck until the amount is covered, and send Sacramento the IOU in lieu of withholding receipts.
Another option would be for those owed tax refunds to get together, pool their IOUs, and sell them for a portion of face value to, say, Peter Milano or Frank "Skinny" Velotta. A few broken legs ("I fell down the stairs -- really, I did!") in the Senate and an unexplained disappearance or two in the Assembly would probably clear the matter right up.
Full-scale tax revolt would be better, though. Imagine if next week, instead of checks and wire transfers from California employers representing all that state income tax withholding, Sacramento got a boatload of notices: "When you get your act together, let us know; at that point we'll re-evaluate your credit rating and consider sending you money again. Maybe."
Saturday, January 31, 2009
"Stimulus," libertarian-style
We're into our second year of "stimulus plans," and they all seem to feature the same logic: If the government spends more money (provided it spends that money "right"), the economy will improve. To quote Wayne Allyn Root, the Libertarian Party's 2008 vice-presidential nominee and one of my opponents for the party's 2012 presidential nomination:
Of course, that logic doesn't just thrive on the Democratic side of the aisle. Last year's "stimulus" -- mailing out tax "rebates" financed not by cuts in government spending but by additional government debt -- went forward with considerable Republican support.
We've got to get past the notion that government is the engine driving the economy. It isn't now, and it never has been. FDR's New Deal -- which Obama's "public works" plan echoes -- probably added at least five years or more to the Great Depression. Hopefully we're not counting on another world war to pull our fat out of this fire.
Wayne Root and I agree on a lot of things, including the necessary foundation of a real "stimulus" program and a real economic recovery -- reducing the expense, not increasing the spending power, of government.
We agree on some of the details, too. For example, I wholeheartedly support Wayne's call for a 2009 income tax "holiday." As a matter of fact, I worked with 2008 pre-nomination presidential candidate Steve Kubby to craft and promote such a "holiday" last year.
On other details we disagree, and I want to explore that disagreement. But first, a disclaimer:
I don't oppose any of Root's suggestions for tax cuts. I've never met a tax cut I didn't like. When Root advocates cutting capital gains taxes, offering business tax credits for new hires, flattening taxes to lower rates, etc., I can only say "yeah! Cut, cut, cut!"
That said, if we are going to select only some tax cuts from the menu of all possible tax cuts (instead of just ending taxation, which I'd do if I could snap my fingers and make it so), I do disagree with Root's argument for cutting "from the top down." His tax cuts are concentrated on the "supply side," and his "flat tax" proposal is even specifically and intentionally "regressive" (your rate goes down as your income goes up).
I prefer a "bottom up" tax-cutting regimen which provides a tax cut for all Americans. If we stick to the current rate regime, that tax cut gets proportionally smaller as income increases, but everyone gets a cut. I support two mechanisms for achieving this cut:
- Adopting a regular annual increase to the personal exemption from the income tax. Every year, every American will be able to make more money before any of it is taxed, and some of the poorest Americans will fall off the tax rolls altogether.
- Applying that personal exemption to FICA -- Social Security and Medicare -- payroll taxes. Once again, every American will get that tax cut, although it will constitute a proportionally smaller percentage of their incomes as those incomes go up.
In support of this plan, I'm going to quote -- or at least paraphrase -- Wayne Allyn Root himself. In his book Millionaire Republican, Root (who, when he wrote it, was a Republican) characterized his party as follows:
That may be a paraphrase, because I can't find my copy of the book at the moment (I believe it's out on loan). But whether the quote is exact or not, I believe that it's an accurate statement of what Wayne was trying to convey. I also assume that the statement reflected one of the positive things he saw, or wanted to see, in the Republican Party at that time ... and that he considers it even more true of the Libertarian Party, which he joined not too long after writing it.
Cut taxes for the rich? Sure. No problem -- if we can cut all taxes. But if we can only cut some taxes, and that's probably the political reality, cut them for those who are trying to get rich, or at least richer. There are a lot more of them, and I love the word "more" -- the phrase "more votes for Libertarian candidates" has a very musical ring, doesn't it?
If we cut the capital gains tax, Bill Gates gets a tax cut, and Bob flipping burgers down at McDonald's doesn't. If we increase the personal exemption, Bill Gates gets a tax cut, and so does Bob. Thing is, for every Bill there are a hundred or a thousand Bobs. Bill's already rich. Bob's trying to get rich, or at least richer. If I could only cut taxes on one of them, it would be on Bob.
Call it "class warfare" if you like, and I won't argue with you. The fact is that more Americans consider themselves "middle class," or even "poor," than consider themselves "rich." When they hear (or think they hear) "tax cuts for the rich," that translates to them as "tax cuts for ... NOT ME." As we get about the business of leaving people's money in their own pockets, the more people we do that for the better. Especially when Election Day comes around.
"Supply siders" argue that tax cuts on what one might call the "entrepreneurial class" produce economic growth because the additional wealth remaining in that class's pockets gets invested in enterprises which create jobs.
That may be true as far as it goes, but I don't see that it's a one-sided truth. Money left in the pockets of the "non-entrepreneurial class" gets spent. It represents economic demand, and that demand is diffuse enough that it probably provides more accurate information to the "supply side" versus the guesses of a smaller number of entrepreneurs with a few more dollars in pocket to spend on testing those guesses.
Instead of hoping that those entrepreneurs guess correctly and create wealth which then "trickles down," why not let the market determine to whom wealth "trickles up?" And since we're going to run into "class warfare" considerations, why not be like God and come down on the side with the most battalions when we can do so consistently with our principles?
Obama believes that the way to get out of an economic toxic disaster caused by too much government spending and debt, is to spend more and go further into debt. Interesting logic.
Of course, that logic doesn't just thrive on the Democratic side of the aisle. Last year's "stimulus" -- mailing out tax "rebates" financed not by cuts in government spending but by additional government debt -- went forward with considerable Republican support.
We've got to get past the notion that government is the engine driving the economy. It isn't now, and it never has been. FDR's New Deal -- which Obama's "public works" plan echoes -- probably added at least five years or more to the Great Depression. Hopefully we're not counting on another world war to pull our fat out of this fire.
Wayne Root and I agree on a lot of things, including the necessary foundation of a real "stimulus" program and a real economic recovery -- reducing the expense, not increasing the spending power, of government.
We agree on some of the details, too. For example, I wholeheartedly support Wayne's call for a 2009 income tax "holiday." As a matter of fact, I worked with 2008 pre-nomination presidential candidate Steve Kubby to craft and promote such a "holiday" last year.
On other details we disagree, and I want to explore that disagreement. But first, a disclaimer:
I don't oppose any of Root's suggestions for tax cuts. I've never met a tax cut I didn't like. When Root advocates cutting capital gains taxes, offering business tax credits for new hires, flattening taxes to lower rates, etc., I can only say "yeah! Cut, cut, cut!"
That said, if we are going to select only some tax cuts from the menu of all possible tax cuts (instead of just ending taxation, which I'd do if I could snap my fingers and make it so), I do disagree with Root's argument for cutting "from the top down." His tax cuts are concentrated on the "supply side," and his "flat tax" proposal is even specifically and intentionally "regressive" (your rate goes down as your income goes up).
I prefer a "bottom up" tax-cutting regimen which provides a tax cut for all Americans. If we stick to the current rate regime, that tax cut gets proportionally smaller as income increases, but everyone gets a cut. I support two mechanisms for achieving this cut:
- Adopting a regular annual increase to the personal exemption from the income tax. Every year, every American will be able to make more money before any of it is taxed, and some of the poorest Americans will fall off the tax rolls altogether.
- Applying that personal exemption to FICA -- Social Security and Medicare -- payroll taxes. Once again, every American will get that tax cut, although it will constitute a proportionally smaller percentage of their incomes as those incomes go up.
In support of this plan, I'm going to quote -- or at least paraphrase -- Wayne Allyn Root himself. In his book Millionaire Republican, Root (who, when he wrote it, was a Republican) characterized his party as follows:
The Republican Party isn't the party of the rich. It's the party of every American who wants to be rich.
That may be a paraphrase, because I can't find my copy of the book at the moment (I believe it's out on loan). But whether the quote is exact or not, I believe that it's an accurate statement of what Wayne was trying to convey. I also assume that the statement reflected one of the positive things he saw, or wanted to see, in the Republican Party at that time ... and that he considers it even more true of the Libertarian Party, which he joined not too long after writing it.
Cut taxes for the rich? Sure. No problem -- if we can cut all taxes. But if we can only cut some taxes, and that's probably the political reality, cut them for those who are trying to get rich, or at least richer. There are a lot more of them, and I love the word "more" -- the phrase "more votes for Libertarian candidates" has a very musical ring, doesn't it?
If we cut the capital gains tax, Bill Gates gets a tax cut, and Bob flipping burgers down at McDonald's doesn't. If we increase the personal exemption, Bill Gates gets a tax cut, and so does Bob. Thing is, for every Bill there are a hundred or a thousand Bobs. Bill's already rich. Bob's trying to get rich, or at least richer. If I could only cut taxes on one of them, it would be on Bob.
Call it "class warfare" if you like, and I won't argue with you. The fact is that more Americans consider themselves "middle class," or even "poor," than consider themselves "rich." When they hear (or think they hear) "tax cuts for the rich," that translates to them as "tax cuts for ... NOT ME." As we get about the business of leaving people's money in their own pockets, the more people we do that for the better. Especially when Election Day comes around.
"Supply siders" argue that tax cuts on what one might call the "entrepreneurial class" produce economic growth because the additional wealth remaining in that class's pockets gets invested in enterprises which create jobs.
That may be true as far as it goes, but I don't see that it's a one-sided truth. Money left in the pockets of the "non-entrepreneurial class" gets spent. It represents economic demand, and that demand is diffuse enough that it probably provides more accurate information to the "supply side" versus the guesses of a smaller number of entrepreneurs with a few more dollars in pocket to spend on testing those guesses.
Instead of hoping that those entrepreneurs guess correctly and create wealth which then "trickles down," why not let the market determine to whom wealth "trickles up?" And since we're going to run into "class warfare" considerations, why not be like God and come down on the side with the most battalions when we can do so consistently with our principles?
Thursday, January 10, 2008
Congressional pay: A modest proposal
From the Fort Worth Star-Telegram:
I've been kicking around a constitutional amendment proposal for many years. I drag it out now and again and tweak it a little. Not that it's important, since it would have to be passed by 2/3 of both houses of Congress and that's never going to happen. Anyway, here it is.
Members of Congress are getting a 2.5 percent pay raise this year, according to Tuesday's edition of the Federal Register. Lawmakers will receive salaries of $169,300, a boost of $4,100. Their last raise was in January 2006.
I've been kicking around a constitutional amendment proposal for many years. I drag it out now and again and tweak it a little. Not that it's important, since it would have to be passed by 2/3 of both houses of Congress and that's never going to happen. Anyway, here it is.
Section 1. The salary of members of the Senate and House of Representatives, prior to the taking of any federal taxes, shall henceforth be fixed for each each year in the amount of the average per capita income of citizens of the United States for the prior year, as determined by the Bureau of Labor Statistics, less the average of total per capita federal taxes charged against said average income.
Section 2. No additional allowances or reimbursements shall be made for personal living expenses beyond the salary set pursuant to this article; however, military barracks space of the variety and in the per-person space allotment used for light infantry enlisted personnel, convenient to and within walking distance of Congress's meeting place, shall be set aside and maintained to accomodate such members as may decline to procure lodging in the capital at their own expense.
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