Chrisb ([info]suddenlynaked) wrote,
@ 2008-01-29 10:17:00
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Twenty Dollar Pell Grant for poor kids
I'm on Greg Palast's mailing list. I think the guy rocks - he might be the last real reporter left on earth. He's got a masters in Economics, studying with Milton Friedman, mister laissez fair trickle down economics HIMSELF, so when the guy makes a critique, he knows what he's talking about.

The pint of his e-mail today: there are roughly 15 million kids living in poverrty in the US, and coinicidently, roughly 15 million in the highest tax bracket in the US. In George's speech last night, he wants to cut some programs and give every poor in the country DRUMROLL..... TWENTY DOLLARS! (I'm not sure if this is over ten years or one year, I'll assume one.) The tax cuts he wants to continue to give the wealthiest 15 million Americans? $287,000 over ten years, or $28,700... (4.3 TRILLLION dollars over ten years)

Compassionate conservatism's finest hour.

In this fictional economy we live in, essentially dependent on credit card debt and continual spending, what do you think would "stimulate" the economy more over the next ten years - 28k for people who need to get educated, fed, clothed, and who gonna buy the same landfill fodder than creates "jobs" or someone that is going to put it into their 401K as a hedge against recession?

That's kind of the argument in the big picture, right? The "science" of economics claims to not be involved in moral decisions, but we're going to tax people no matter what and we're going to pay people no matter what. It's pretty clear to me where the money needs to go.

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[info]stardragan
2008-01-29 07:22 pm UTC (link)
This is what happens when the people in charge have no idea what money will actually buy and don't care since it doesn't effect them. They have more than enough and want more and could care less about anyone else.

I see the bad part of the economy since I work with bankruptcies. The majority of the people filing are not poor, they make close to $100,000 a year. They have overly large, over priced houses and 2 or more mortgages. Plus credit card debit and luxury cars. They ask for stuff in thier budget like private school tuition and cell phones for their children like this is standard for everyone.

Will a $600 tax rebate really help the economy? Maybe a little but not long term, not like lowering the price of gas. Do tax cut really help? No because the average person like you and me bare the weight of those above us, while the poor are given earned income credit that gives them a large refund which is spent in one day on something that isn't really needed and then they are back where they started still with debt but with a big screen tv now.

Sorry for the little rant but this is something I feel strongly about.

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[info]suddenlynaked
2008-01-29 08:47 pm UTC (link)
I hear ya - I don't think we're going to solve the structural inequities by taxes alone. How many shinys do we all buy on impulse? It keeps the "economy" going when some poor schmuck stamps out plastic Mickey Mouse toys all day, but it's not doing much for the long term health of anyone. Or shiny cds... I can imagine a life without Mickey Mouse tchochkes but it's harder to imagine it without the access to music that I have.

Do you know the national mean income for bancruptcy filers? It would mak sense to me that most would be middle class falling into problems at some point. We trundle along with with all our landfill fodder and it doesn't matter if we make $100,000 a year or $30,000 we ratchet our expenses to the point that a LOT of us are all two weeks from the relative street.

I'm with on the notion that $600 rebates aren't going to do much, and getting people to use their money wisely, well I'm not going to try tell other people how to live and I have NO sympathy for the banking industry which is stealing from us in such wholesale numbers that it should almost be a DUTY to screw them on your credit cards. (Which is why they pushed for bancrupty "reform" and got whhen it started to look like credit was a bubble)

While I know a more equitable tax structure isn't a cure all, it wouldn't hurt.

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tax reform
[info]sgoilear
2008-01-29 09:04 pm UTC (link)
I'm tellin' ya, my slightly modified 10% flat sales tax would make it easy ...
10% [5% Fed, 2% state, 1% county, 2% municipal] on all purchases OTHER than staple foods, utilities, and primary owner-occupied residences. No other taxes, no tax deductions.
You'd cut the IRS and state tax collection budgets, and still generate about the same revenue as is done now.

Someone who's poor would pay tax on ... clothes. No utility taxes, no food tax, no income tax.
Middle class? No property tax on that home you own (and live in, if only one)(which can offset the 'lost' deduction for home loan interest). Tax when you buy your car though. And tax when you go out to a restaurant, or buy frozen dinners.
Someone who's rich would pay ... well, 10% is more than a lot of people in the upper brackets, with legal or mostly-legal shelters and credits pay.

Sadly, my college stat and econ aren't robust enough to have a simple solution for corporate taxes. =(

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Re: geez, another lengthy reply from me =)
[info]suddenlynaked
2008-01-29 09:22 pm UTC (link)
I'm almost there, if it's done right. As a socialized medicine proponent, if we ended up with it at 20 percent and no for profit insurance middlemen, we'd still be way better off than the current 30 plus percent.

When I was a kid, and shortly before that evil socialist Eisenhauer worked with an 80 to 90% tax bracket for people that made more than $400,000 a year in 1950s dollars.

But yeah, a system with no property tax on your primary residence, I'm there. You buy the place so you don't have to pay rent.

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Re: geez, another lengthy reply from me =)
[info]sgoilear
2008-01-29 09:37 pm UTC (link)
As a hypothetical counter -- if health care costs for non-severe care dropped to about what most co-pays are these days, would you be willing to avoid universal government health care [UGHC]?

Yeah, I know, that's a BIG, HYPOTHETICAL if ... but in theory, if private HC did that, would it be okay?

One reason most people don't expect, for me to opposed U.G.H.C. -- drafts of the legislation leading towards it also mandate doctor visits (don't go your doctor, you can be fined/jailed), don't allow for religious concerns (to refuse treatment), and eliminate second opinions.

In the broadest terms of goverment/social care, I want for people to receive what they deserve from their own efforts -- I'm okay with a modest safety net, but I don't want it to become so used that people no longer have a reason to strive on their own, and so used that it becomes McHealthCare, where the quality of the care you *do* receive, drops to that of Canada or Britain (or worse). As a friend there puts it "you'll get care ... eventually ... but at least you don't pay extra for it!"

Britain, of course, was famous for having a 96% [top] tax bracket in the late 20th Century (on top of VAT/GST, whatever it's called). You thought the IronWorker was bad! :)

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Re: geez, another lengthy reply from me =)
[info]suddenlynaked
2008-01-29 10:00 pm UTC (link)
Well, weird government mandates will probably end up in it in Amerika, and yes that should frighten us. But more than the current system? At least in a government health system I can vote for the guys who will eventually run the policies. The current system? Go ahead, find another doctor / hospital / insurance company - whatever, we don't care, we don't have to.

What I want is a system that doesn't instantly bancrupt someone who doesn't have health insurance.

And it's going to be a nutso battle because the money is piling in to the campaigns from - who else? - the insurance companies. It's likley we'll end up with a health care insurance system that is the worst of both worlds. All Hillary wants to do is mandate that you carry health insurance - see, problem solved, and I *didn't raise taxes*. Shoot me now. (no, don't say that out loud. might give 'em ideas...)

But we've got to try - $20,000 for an appandectomy and an overnight stay is not health care, it's greed.

I think the economic motivations for people striving on their own are overstated. If money was the only motivation behind Gaia Consort, we'd be the Gaia Consort real estate company. Virtually every time I start measuring our success in dollars, I shoot myself in the foot somewhere. Money pays for recordings, good players, room rent, but it's not supporting either Sue or I. If Gaia Consort makes anything on top of the door, it pretty much goes into the black hole of gear that makes it possible for people to hear us. If I'm ever capabale of making the mortgage with GC, I'm not sure *what* we'll do. I hope it means Sue has more time for her visual art.

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Re: geez, another lengthy reply from me =)
[info]sgoilear
2008-01-29 10:23 pm UTC (link)
Surgery/outrageous: I'm with you on that one! At first, one might be tempted to buy into the "well, that's how much all the stuff costs" ... until you hear stories about doctors and hospitals donating their time/waiving 'labor' (skill?) fees for hardship cases. One fellow had several operations to remove tumors -- no health care, and the doc+hospital only charged him for "materials" which was something like $800 per surgery. Hrmmmm ... :P~~~

I don't think everything someone does must strive for money; rather, I'm saying that people should ardently try to support themselves, not PRESUMING the government will make up ANY shortfall.

It's like my old college T.A. -- when he became a professor, his grade policy was "if you make no effort, you get the grade you earn; if you try your best, you will never get a failing grade".

My sweetie and I devote enough time to monetary gain that we survive (and hope to start making mortgage payments on a house before both of us hit 40 ... we'll see); but we also spend time on things we enjoy, including efforts for other people (and nature!) I don't think this is and unreasonable standard/expectation... do you?
(genuine, not sarcastic/rhetorical question there)

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Re: geez, another lengthy reply from me =)
[info]mholmesiv
2008-01-30 01:01 am UTC (link)
Not sure where you get the current 30+ percent from. My 2007 Federal Tax liability is around 7% of my total income. When you add Social security and Medicare, it comes out to 15%. I'm not even that big of a special case, no tax havens or anything else, just my 401K, my mortgage, and my wife not working for the year. It would take a lot to get up to an average of 30%, since even at 100K of "taxable income" you're looking at 22%, that 100K would translate to 130K before deductions if you have a house at about 250-300K and max your yearly 401K allowance, so that takes it to 17%. Suddenly that 20% flat sales tax starts looking less fun.

(Not that I'd complain, I'm a socialist :))

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Re: geez, another lengthy reply from me =)
[info]sgoilear
2008-01-30 06:36 pm UTC (link)
hehe, forgot the post is friends-only -- here's how it broke down for me:

[1984-2004] Income: $766,000

"Income" taxes (federal/state income, Social Security, etc.): $226,400
Sales tax (state): $21,700
ATF taxes (mostly alcohol, let's be honest): $10,500
Living taxes (utilities, property*, food-snack, etc.) $6,100
Transportation taxes** (federal/state gas, vehicle reg, airport, 9/11, etc.): $13,900

Taxes total: $278,600
Effective tax rate: 36.4%

To look at it another way, on _average_, I've made ~$36.5k per year for the last 21 years, and paid about ~$13.3k per year in taxes.
* Since they're passing it on to me in my rent, I'm figuring that I'm paying my landlord's property tax (pro-rated for number of roomies I've had, when living with 'em).
** I'm tempted to list auto insurance, since it's (essentially) required, but it's not paid to the government, so I'm not.

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Re: geez, another lengthy reply from me =)
[info]mholmesiv
2008-01-30 07:54 pm UTC (link)
Aah, see, that's where I'm lucky. We own a house, which allows us to deduct interest and property taxes (Comes to close to $20K a year). I also reduce my taxable income by putting over $10K a year into a 401K. My wife, when she's working, would do the same thing. This reduces our "income" significantly, by 30K -> 50K a year, which is what reduces our tax liability.
You have to know how to work with the system. Unfortunately it's geared towards people who _can_ afford to do things like buy a house and lock 10-14K a year away until they retire. We also do other things, like contribute to a Roth IRA, which doesn't help us now, but will help us later (proceeds from a Roth are withdrawable tax free)

I probably pay less taxes than people who make ten or twenty thousand less than me a year, which just goes to prove that the tax system is broken :)

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Re: geez, another lengthy reply from me =)
[info]suddenlynaked
2008-01-30 08:06 pm UTC (link)
Yep, bless the holy mortgage interest deduction.

One bit as well - it's a tough call to say whether the matching 7.5% employers ppay into SS should be included in that - but the self-employed pay the entire 15%...

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Re: geez, another lengthy reply from me =)
[info]sgoilear
2008-01-30 08:20 pm UTC (link)
It's worth mentioning some [D] folk have made noise about eliminating home loan deductions. No, I don't ever expect it will happen (I suspect it' the usual play of "oh, don't want THAT to happen, so you better agree with us on THIS instead").

Remember, deducting property tax, means you paid 100% of it, then got 25% (or whatever your bracket is) of it back via lower income tax. It helps, but some people (who aren't in ownership positions yet) misunderstand it.

Retirement stuff ... makes sense, if return + tax advantage > current debt interest rate. Someone in the 25% bracket puts in $10k, they save $2500 in tax liability, and get say 5% on top (I know, some up, some down, some matching, some not -- being simple here) are effectively 'making' 30%. When they go to withdrawl, they hope to be in a lower bracket, say 15% -- so they're still effectively making (30-15 =) 15% on their investment. If you have credit card at 23.9% ... you might do better to pay on that. But if you employer matches 50%, now you're netting 17.5%, which beats most car and home loans, and many credit cards. =)

For most people, saving for retirement makes a lot of sense -- and there are tax advantages to it (thankfully!) I actually like the Roth a lot too; since you're taxed up-front, you can be more aggressive in your investments (you're not taxed when you make qualified withdrawls).

Don't forget that state sales tax is still deductible for tax year 2007, if you itemize!

Of course, if you're a couple doing well, and make $156,400+ between the two of you ... you start losing itemized deductions like home loan interest. Ouch! This limit may be coming down as low as $90,000 in the coming years, which could really be a downer.

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geez, another lengthy reply from me =)
[info]sgoilear
2008-01-29 08:55 pm UTC (link)
Well, being a free marketeer, I had to do some fact checking ... ;)

12.333M people <18 at poverty line {close}
2007 top tax bracket is 35% for an AGI of $349,700+ (oddly, doesn't matter if you file individually, HoH, or married/jointly)
For the last tax year data available ...
3.57M at $200k+ (meaning top two brackets) {not even close}
There were only ~1M filed in the top bracket -- now, granted, some are single, some are married, and some have kids.
Even doubling the figures, we're still not at 15M in the top tax bracket.

Don't forget, many tax cuts help the middle class as well as the upper class; people freak out about the rich paying lower taxes -- but don't forget the tens of millions in the middle class, for whom a couple grand in tax savings might mean keeping their house.

But here's something else to consider: private U.S. philanthropy in 2006 was $295 billion; it's hard to argue those making the most don't help out -- I mean, above the taxes they already pay. One could argue that p!ssing them off by hitting them with [$287k x 1M =] $287 BILLION in additional taxes (compared to what they're paying now) might well lose a chunk of that $295B of "the goverment's job".

And economics is about creating, distributing, and consuming goods & services -- it's not inherently about tax-and-spend ... but it should be able to help us understand the effects of our taxation and spending. The political question is, as always, how much should an individual cede to their government for the "common good". If you say 100%, you're into communism/socialism; if you say 0%, you're into anarchy. Personally, I don't think 'donating' 20% of what I make, to the common good (via government) is terrible, though I think it could be streamlined to 10%. Sadly, with taxes on earning, saving, spending, and dying -- most diploma-toting adults will probably pay closer to 33-50%* if they choose to have a career.

However, you can be certain I want it spent efficiently -- between spending billions on an ego-trip conflict (and I don't just mean G.W.B.) and spending it to preserve wildlife, offer subsidies for vocational education, or provide temporary assistance to unemployed (who aren't cheating the system) ... you can guess where I want my money to go!

Speaking of war and economics, here's an interesting observation from 2004. The tax rebate checks are just a gesture to boost confidence. I don't think anyone seriously expects everyone to take the money and spend it just to boost the economy. They will only be "worthwhile" if people buy into it, and stimulate the overall economy (while neglecting their own, to a degree).

So, if the aim is the most bang for the buck, it might well be had by giving people something that might make them more confident about spending/donating -- either of which puts money toward helping the lowest income folk.

* In 2004, I calculated my tax paid out (starting from my first federal income tax filing) to be 36.4%; I'm now married, and in a higher bracket (but we're still in the lower half) -- scary!

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[info]suddenlynaked
2008-01-29 09:34 pm UTC (link)
"Even doubling the figures, we're still not at 15M in the top tax bracket."

To be fair to Palast, he actually said "15 million millionaires" - so I'm going to guess that he's including kids.

He said: "Here’s your second question. The President also demanded that Congress extend his tax cuts. The cost: $4.3 trillion over ten years. The big recipients are millionaires. And the number of millionaires happens, not coincidentally, to equal the number of poor kids, roughly 15 million of them. OK class: what is the cost of the tax cut per millionaire? That’s right, Richie, $287,000 apiece."

Of course, going by upper tax bracket filers, that means that the per capita tax break is actually a lot higher - but it's not a poetic.

I'm not sure about pissing off the philanthropists - like I said, when I was growing up the upper tax bracket was 90% - and that paid for serius lawyers looking for deductions. Just guessing that would be something like 90% ove all money above $4 million dollars now.

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[info]sgoilear
2008-01-29 10:04 pm UTC (link)
Well ... there are a lot of millionaires -- here's an important distinction: $1M+ in total assets (less liabilities), or an AGI of $1M+/year.

There are only ~300,000 returns filed for people making $1M/year or more. I can't imagine those are couples with 48 children each.

However, if you were to count households filing, whose income level is enough to end up making $1M by the time they reach retirement, I could believe that represent 4-5% of the nation.

Of course, the President doesn't enact law -- Congress does. But he (or next year, maybe she) certainly influences the process. You can see how it jumped around [source]
1951-1963: 91% on income over $400,000 {Truman/Eisenhower/JFK}
1964: 77%/$400,000 {LBJ}
1965-1967: 70%/$200,000 {LBJ}
1982-1986: 50%/$85,600-$175,250 (incremented yearly) {Reagan}
1991-1992: 31%/$82,150-$86,500 {Bush I}
1994-2000: 39.6%/$250,000-$288,350 {Clinton}

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