Wednesday, April 07, 2010
Social justice factoid of the day:
About 47 percent will pay no federal income taxes at all for 2009. Either their incomes were too low, or they qualified for enough credits, deductions and exemptions to eliminate their liability.
If the Democrats (and, to be sure, the big government Republicans, who are, sadly, legion) manage to excuse another 4 percent of households from the federal income tax, non-taxpayers will be in the majority and, presumably, able to vote themselves even larger benefits. At least until the taxed minority works it out to earn less money.
Fortunately, people who have not figured out how to earn enough money to pay income tax often do not choose to vote. At least we've got that going for us.
Yes, a real concern. Certainly we should have a fair tax burden - system for all.
For some reason, this does not quite bother me as so much of the folly being pushed today, including the takeover of US Health Care. Perhaps I see the dysfunctional existence of Unionized Employees in Government, even a greater problem. NJ is a prime example of this mess, including the destructive grip of Teachers Unions.
Certainly it is all related.
No doubt about it, if all Americans had to pay some form of income taxation, then many might not be so eager to see these taxes raised to pay for poorly provided Governmental social welfare.
As much as I appreciate Tigerhawk, the reference to 'big Government Republicans' can be a bit tiresome these days, as we know they are very few. The bigotry against the GOP has become a rather fashionable game without much objectivity (Perhaps it will serve in a very positive manner in the future - encouraging more sound conservatives in the future, but I remain rather skeptical of the fashion).
I strongly feel, the Democrats ARE the problem, and if we don't focus on the true source of the folly, we are only going to enable the troubles we face.
As a conservative, I want all to succeed, and would absolutely accept the effort to have a more progressive tax rate to enable those less fortunate to grow towards greater success.
I have encountered first hand the problems with socialism and communism. We cannot have minority supporting the rest, with a monopoly in Government living the high life - determining all the rules. It is a recipe for disaster, oppression, lower qualities of life, pure regression, etc.
But we all pay taxation in numerous forms, besides income taxes. It is a powerful point, yet it fails to review the entire context of the problems we face with the Democratic Partisan disaster. A progressive income tax system is the LEAST of our problems.
Everybody should pay something who is above the poverty floor. Either that, or there should also be a progressive VOTING system such that you have more influence on government if you pay more in taxes.
One Man One Vote was fine when you had to be a property owner to vote in the US.
Nowadays people are allowed to vote who can't find Washington on a globe, can't figure out HOW to use the voting machines and couldn't name the candidates if their lives depended on it.
It's shameful...and it will be the end of us.
So, literally the bottom 40% are on federal welfare. I repeat here that Bush II, while cutting taxes, also made the tax system more progressive than it was under Clinton.
Timing is important in elections and I think this "wave" is swelling ... good politics electing Obama if so for the USA shed the racist image while providing the socialistic as opposed to individualistic [fairly written I think] office holders the leeway to be themselves with little restraint for two years.
I was going to paste this site here when I saw it on Drudge, but you already did. Cool.
In fairness, those who pay little or no income tax typically pay payroll and other taxes. Payroll taxes actually fund current government spending. The IOUs and lockbox are an accounting fiction. Honest accounting would collapse and consolidate. Government needs something more like GAAP.
" the reference to 'big Government Republicans' can be a bit tiresome these days, as we know they are very few."
I disagree. Certainly under Bush-Cheney, government grew and not just the military. Romney gave us RomneyCare. Huckabee would be a big spender, if given the chance. I could go on.
There's an up-and-coming crop that show promise. Expect the Republicans to at least re-take the House, and to win back several states. They'll have a shot at redeeming themselves.
I also take issue with Brooklyn's comment, and I cannot believe anyone would say there aren't lots of big government Repubs. There are, including every member of the Bush family. The socially conservative GOP'ers, like Huck (just as he was in Arkansas as governor), would be big spenders. Many Congressional Republicans are big spenders too, and it's silly to think they wouldn't love a VAT just as much as the Democrats.
If the Tea Party accomplishes anything, it'll force the Republicans to toe the fiscally conservative line. There is no hope at all for the Democrats (and they are liberty stealers anyway). Getting the GOP to reduce spending will be difficult but it has been done before and can be done again.
Reading The Forgotten Man right now, and it's amazing how much Obama seems to parallel Hoover as President (except for the Federalism issue, where Hoover finally stood up for Federalism and Obama never would). Taxes, tariffs, efficient big government, intrusion into the private economy...it's all been done before (but for similar economic reasons).
One big difference is that in Hoover's time less than 10% of the population paid Federal taxes. We've actually broadened the base since then, and it makes me wonder how often in our past (WW2 years excluded), the tax base has been broader than it is today. Anyone know?
"the reference to 'big Government Republicans' can be a bit tiresome these days, as we know they are very few."
lol. There is one big government party in the United States, and it is the Democratic-Republican Party. Political freedom and independence today begins with freedom and independence from the dictatorship of the Democratic-Republican two-party state and duopoly system of government.
47% seems too high to me.
Somebody pointed out that many of the 47% will be paying an employment tax. VAT would be even better, as it is a tax on spending and therefore encourages thrift. It is also fairly hard to evade.
I think the tax burden on the average person should be divided about equally between income and spending. I feel employment taxes are a bad thing, but I may be wrong.
(Note that VAT covers much more than a simple sales tax.)
The political fault line is between those who get government checks and those who pay for them.
GE CEO Jeff Immelt is on the public dole.
A guy making $40,000 sees a lot of deductions on his pay stub -- it'd be even more if the matching employer contribution were shown. Don't say he isn't paying any taxes.
Aspiring to a degree of loyalty short of jingoism, I sincerely credit overwhelmingly those in the USA fighting courageously, working hard, enjoying life convivially, and being great families for this:
Of all the people in human history who ever reached the age of 65, half are alive now.
Wait, Truth is Out There, please ...
Payroll "taxes" are personal social security insurance payments guaranteed by what is still the AAA credit rating of the USA (practically obviating a consideration of the lock-box fiction).
And, I think, I have this right. Are they not getting a refund from these payments each year? So is not then the tax credit a discount for those insurance premiums we are all required to pay under the Social Security Act (if that is what it was called)?
I think your point is moot, very respectfully stated. Put another way, those bottom 47%-ers are getting something for free despite - despite - their payroll taxes, i.e., more social security insurance than they paid to have.
It is still welfare.
I'm in favor of this actually as is, i.e., low and hyper-progressive taxes; but I think making sure people understand the deal is important, i.e., that we already are taxing the rich and spreading the wealth overwhelmingly and the the means to rise is the same and more abundantly so as in Benjamin Franklin's day: education, work, sobriety, continence, and economy; with plenty of fun to be had along the way, the best things in life being free and more so in the USA.
I think the key to reform is small-medium government Republicans dedicated to efficient taxing-and-spending for the sake of justice despite the marketplace. Rhetorically, Democrats have a point and always have had a point. There is a balance to be struck between government intervention in the market and free enterprise. The problem currently is that due to both parties, it is bloated, i.e., too big and too inefficient. Public education is a great example. I think even the most hardened free marketer would agree the government ought to tax the rich, among others, to fund the education of the poor; but efficiently producing huge gains in education for whatever expense. That is the Republicans road to victory ... education reform.
Good one, Anonymous. It occurred to me, too.
But, there is an efficiency to be derived with tax credits and every citizen is subject to the laws of the USA and so, while not taxed, is restrained in this way ... laws can be taxing, if you would consider it. For a more compelling example, if push comes to shove, we are all soldiers. [You get the idea.] And tax credits today; but with the understanding that should they be promoted in the future [or write the next Harry Potter type series] ... knock, knock ... it's the IRS.
So jobless claims are up again.
It's such a excellent mini-lesson in what happened, arguably, of course, in the 60s-70s. The Obama Administraion/Congress keep extending unemployment, thus permitting the unemployed to avoid taking that horrible job that might be both humiliating and a tragic pay-cut. And, why work if you don't have to. Even if one is not consciously thinking these things, such impulses have a way of manifesting. That's just the everyday scenario, not mentioning all those who lived on the unlimited dole and partied with sex, drugs, and rock-n-roll, in the 70s while others worked hard to pay Carter-level taxes for them and their carelessly bred children.
I don't condescend to those unemployed here - it's hard and depressing to face this as I well know; I merely point out the political Catch-22 of the Obama Administration's situation.
Re: "Payroll 'taxes' are personal social security insurance payments"
This is worth debating. It has important consequences.
E.g., if you're a hard-working, private-sector 30--year old, payroll taxes are reducing your take-home. If you only make $40,000, it's a decent bite, more so when you include the employer contribution. To this 30-year-old, the government is taking money from him to spend on things today ... with the dim promise of some benefit a lifetime away.
It's a tax.
Until recently, (1) the amount of payroll taxes collected was greater than (2) the amount paid out to to retirees, and so made a net contribution to the general welfare. This is no longer true. The fiction of the lock-box is now over. ObamaCare further exposes the fiction by extending "payroll taxes" to new sources. Expect more of this ... and higher rates.
It's a tax.
FDR sold Social Security to voters as an insurance program, but it was actually structured very differently to pass Supreme Court muster. The Supreme Court had just over-turned a social insurance program for railroad workers because it said the federal government didn't have the authority to run a funded insurance program with vested rights. So SocSec was drafted to be a tax-based wealth transfer program ... with no vested rights. It was expressly argued at the time that the government could drop SocSec at any time.
It's a tax.
The 1980 changes -- which I haven't studied in depth -- brought us the lock-box and clouded this. A 1930s Supreme Court -- even with FDR threatening court packing -- would likely over-turned this.
It's a tax.
My hypothetical 30-year old expects to get screwed over. I'm 52 and I expect to get screwed over. When I was 20 I got screwed over -- but that's another story.
This is important to addressing our fiscal predicament honestly, and not alienating potential voters ... especially among the young.
You can argue that someone making $40,000 is getting too good a deal -- all-in -- or shouldn't just expect only others who make more to pay for Obama's plans, but don't say they're paying zero taxes, when they are.
More honest accounting would help on this.
The year 2009 is a poor year to judge since those dependent on annuities and stock or bond or money market income had low earnings this year. In previous years we were paying taxes, but not this year. We will be paying again soon, especially after the Bush tax cuts expire at the end of 2010.
"More honest accounting would help on this."
There is exactly zero chance of that ever happening.
At least with payroll taxes you have a chance of understanding what the bite is - if you are paying attention, as too few do.
What about the hidden tax coats that are embedded in every good or service that you purchase? Part of every price is the taxes levied on all who had any part in producing the good or service. My doctor could charge less if he had no income taxes or property taxes or sales taxes.
At least if they institute a VAT tax it will be more difficult for "cash workers" to evade paying taxes.
To Anon at 1:22 pm
In theory we'd be better off with a VAT to raise 1/3 to 1/2 of our federal taxes, and our federal taxes should not normally go over something like 15% of GDP -- Congress should budget to that amount in normal course. If we also cut or eliminated "distortions" like corporate taxes and deductions for mortgages and munis, our private sector would once again kick ass.
But that's not what Obama is planning. He wants to (1) impose a VAT on top of what we already have, plus (2) extend payroll taxes to all income from all sources, after he's locked in commitments to greatly expand the spending side of the ledger.
How do I know this?
Because I can channel Obama, which is scary. He's not that innumerate -- this is the Obama-Axelrod plan you could see coming two years ago.
Ultimately, taxes like this are the only way to balance the other side of the ledger, given that we're pushing federal govt's share of the economy to nearly 30% -- actually higher if we had honest accounting for state mandates. All-in government will be over 50%, higher still when you include co-opted big companies.
The intent is to make the US into something more European than the Europeans -- all run by a mandarin PC political class. Killing private sector incentives isn't a bug, it's by design.
But instead of a European paradise it will end like the worst of Argentina ... Peron without the gold braid. As I write, "under 25 unemployment" in Spain -- land of the Green Jobs -- is 44.5%.
I once read a one-sentence history of Japan: "We are not Chinese." Let's see if a one-sentence history of the US still applies: "We are not European."
Paying taxes should hurt. I run a small Schedule C business and every quarter I or my wife fills out checks for our estimated taxes and sends one to the feds and one to the state.
I bet if we repealed withholding taxes that we'd not have the spending problem we find ourselves in right now.
The bad thing about the VAT is that it is like the frog in the pot of warming water. The 20-25% numbers now prevalent in Europe started out at one or two percent.
Truth is Out There; Everyone ...
I'm wondering exactly what the 47% figure means. Are those 57%, after deductions, etc., paying payroll taxes and then getting that amount, at least, refunded, and net paying zero taxes? If the refund matches or exceeds the paryoll taxes, then yes; that would getting social security insurance for free. Whoa! Does anyone get this accurately? [I think if they try to means test social security payments lawsuits will prevent that.]
It is an expense ... so is an insurance premium. The government charges you so it is a payroll tax. But it is one insisted upon by advocates for the poor and one I think is great. The problem before FDR was that people would get old and poor and needy. Now people are forced to pay the government for the right to care in their old age. And all insurance and it's equivalent, which was the point of my post, is that ... a payment today in the unlikely event of something happening in the future.
The point is the same, Truth is Out There, it would seem in a way that disturbs you. If they are indeed paying taxes net because of payroll taxes, which I don't think is the point anymore but rather they actually are not, they are paying for their own insurance, not for any share of running the USA. They are getting things for free including at least a discounted gurantee of elderly care, or, if I'm right, a free guarantee of elderly care. They don't pay for armed forces, police, schools, highway, or anything they enjoy communally with the rest of us. They are free riding on working people and they are on welfare essentially ... 47% of USAers are on welfare ... and complaining about it.
"The vast majority of people who escape federal income taxes still pay other taxes, including federal payroll taxes that fund Social Security and Medicare, and excise taxes on gasoline, aviation, alcohol and cigarettes. Many also pay state or local taxes on sales, income and property."
OK: The 47% include those who do pay at least some portion of their payroll taxes (although certainly many of them may or may not depending on the size of their refund). But the essence remains Truth is Out There; these people have may claim a right, which is subject to the statutory will of our democracy (but that is our social contract), to be cared for at 65 because they are paying for it now. It's a personal expense required of them for their own benefit.
It's the Tax Eaters vs. the Tax Payers - and it's obvious which side is winning.
Although many don't even realize how mauch tax they pay - and when they bring in the ultra-sneaky VAT it will be even worse.
47% pay no income taxes; I think this indicates total tax liability including payroll taxes. 60% pay 5%. This is not justice. People who make less do so for many reasons ... one presumes vast swaths of them are reprobates as well as the ethical poor.
Good point Anonymous. I think there is a referree in the middle who can be swayed to favor justice; I like to think of it as Inspirational Kansas - Putting Principal Over Pocketbook. And, if the Tax Eaters cannot put up employment, income, and GDP numbers they'll devour themselves and Reagan 2.0 would arise.
Not a real concern.
What Tigerhawk, in typical fashion, omits, is that the bottom 50% of earners only earn 13% of U.S. income.
Yep, only 13%.
They pay 3% of taxes.
Which is not surprising if the income tax is progressive. Or the marginal utility of money decreases, in which case it may not even be progressive in a utilitarian sense.
Truly a bizarre claim without context.
It should be rephrased to show how much of taxes are paid by each decile of "earned income," not each decile of earners.
A KEY FAILURE of our chief financial officer of a blogger.
Of course, "Fact Checker," your point is irrelevant to my post, which simply observed that we were close the point at which people who paid no income tax would form a theoretical electoral majority. Your "facts" on the distribution of wealth respond to the straw man argument you wish I had made, rather than the point I actually did make.
You do raise an interesting question, though: Is it actually fair that the people who earn only 13% of the nation's income should get half the votes?
@ Fact Checker
While you're at it, why don't you run those figures back over the past 50 years and give us a picture of the creation of the US Welfare State.
Liberals like to call themselves "Progressives" nowadays. How appropriate! Their policies have progressively turned America into a society where the majority produce nothing (or essentially nothing (13%), but VOTE to force the productive minority to sustain them.
Even Socrates knew that was unsustainable....and I suspect he was not a Chief Financial Officer.
Fact Checker throws an ad hominem red herring, and would take us off trail, yet we follow it.
Instead consider the following: The 47% figure is misleading. Many within the 47% actually get pay stubs that say that they're paying federal taxes. The distinctions of what's "FICA" vs "Federal Income Tax" doesn't figure to them. To them, it's cash they didn't get that they could really use. Try living on $40,000 for a year. Next time you get served your breakfast, tell your waitress she's not pulling her fair share of federal spending. It's not a good answer to say that she should have studied harder and gone to Princeton.
JPMcT -- with whom I mostly agree -- should reread those last three sentences slowly.
If we keep arguing about "47%" we lose common cause with many within that 47% who are anti-Obama, and even potential Republican wannabees. Not unless you want just a Country Club Republican Party -- or a Big Statist Republican Party, which is actually what we've had.
You misinterpret me (I get a lot of that).
The aim of the Republican Party should be to get EVERYBODY up to the point where they pay taxes...thus keeping the government solvent (as long as it does only what it is supposed to do), the national debt low and the tax rates low. If you don't like the size of your peice of the pie...work to make the pie bigger!
Democrats are only concerned with the relative size of the pie pieces...and see the national economy (the pie) as being unexpandable). That's their basic fiscal fallacy.
My daughter makes about 40K a year as a teacher of gifted students. She pays taxes every year. so do waitresses, blue collar workers and a whole lot of people who never saw a community college, much less Princeton.
My issue is that there are a whole lot of people who pay NOTHING. Indeed, they GET MONEY from those that do pay. Some of these people are appropriately in this segment because they are poor, elderly or disabled and CANT produce. Our society (not necesarily our govenment) should help and does help.
Those who WONT produce are the final group towards whom my comments were directed. I suspect there are a hell of a lot of them..and I doubt that there is a Republican among the lot. Many are still waiting for Obama to pay for their gas and rent...and I doubt that they will be disappointed.
It isn't a matter of the "Haves and the Have Nots". Rather, IMHO, it is the "Dids and the Did Nots".
Just to respond to the "Truth is out there" and others. Thanks for the response. I disagree however.
I am speaking about the larger fashion which is blurring reality, with stereotyping the GOP as being equal to the Democrats.
Sorry, but the fashion is thick, and there is simply no equating.
GW Bush cut taxation, one of the few ways Milton Friedman suggested one can tame an out control bureaucracy.
When the Republicans held the slim majorities in each body of Congress in the years 2002 to 2006 they may have still spent too much, but they just were not as bad as many portray. Besides, there is no comparison - to the 10 TIMES as much spending we have witnessed since Democrats took control of Congress in 2006.
See a little simple chart here:
Romer: “America is too stupid to understand my superfantastic advanced Math skillz!!!1!”
I am not a libertarian, but a Conservative. I follow the WFB and Milton Friedman offering, focus on the facts. Reagan spent big time - I understood it. I wish he had been a little more restrained, even though it was probably essential to win the Cold War. But do we refer to Ronald Reagan as a "big government Republican"? No, government size grew under his watch, he even appeased the Social Security failure with Democrats, but he was far from seeking 'big government'.
The point is, many have elevated disastrous 'big spending RINOs' to a fashionable acceptance, where many wrongly see MOST Republicans as being for "big government". It simply is not true. The vast Majority are for a more limited offering, or a restrained level - which is not the same as the libertarian concept - seeking more of a "non existent" government system. Christie is a prime example.
No doubt, so many can do better, but to present a generic fashion about all Republicans, is simply not objective.
Just wanted to add more to explain my position:
Many Republicans, like GW Bush, Pawlenty, Romney, Daniels, etc., manage as sound CEO's growing revenues by producing healthy economic environments with lower taxation, reasoned regulations, more restrained spending, etc. Hardly 'big government socialists' in any sense. Often, like GW Bush stated accurately, the entitlement spending is the main problem with mandated expenditures. If GW Bush had his way, Social Security would have been reformed, and the spending of the US Government would have been lowered even further.
Many are upset by Deficits understandably, and Bush had those sinking before the Mortgage Collapse which undermined the economy. Fiscal responsibility, or a lack of fiscal restraint, is different than a commitment to creating "big government". The agenda is an important aspect in all things.
The hostile nature towards GW Bush, is often an emotive reactionary product of Conservative fashion. Some of it born after 2004, with growing fears over Iraq. Much of the nasty treatment of the Bush Family seems rather overt.
Indeed, GH Bush made a huge mistake with raising taxation, but his Presidency was not as bad as some present. Dukakis would have been like the Carter, Clinton, Obama folly. Bush Sr. can largely be thanked for empowering US foreign power, finally overcoming the overwhelming fear of US Armed Intervention, with one of the first real victories using the might of the US Armed Forces after Vietnam. His leading the world to destroy much of Saddam's capability and liberating Kuwait was a stunning victory for the USA and the Free West. It was the right thing to do, for a vast number of reasons. In many ways, GH Bush was a pretty fair President.
GW Bush on the other hand, was a great President. Primarily because he correctly handled the GWOT, and his leadership is on par with the GIPPER in this manner.
But few recognize the success of the 'Conservative Ideal' in TEXAS now being advertised by many Conservative Pundits, is largely due to GW Bush's success as the Lone Star State's Governor. His policies were actually just as sound on the Federal Level as they were on the State Level. Including the exchange with Kennedy in Education to get needed standards, testing, competition, etc., with a little more spending. A strong defense of the Drug Prescription effort can be made as well, for it was rightly designed to lower costs in Medicaid, Medicare, etc., with preventative focus - and free market principles. If GW Bush was able to reform Social Security, the Mortgage Problems (the Bush Administration tried 17 times), and even Medicare, we might actually be pretty well off - as compared to what we see today.
But the abandonment of the GOP after 2004, with all the hyperbole from many who undermined their own interests, gave the keys to Congress to Pelosi, Reid, Clinton, Boxer, Schumer, Obama, Obey, Waters, etc. We are all paying for this today.