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Go Home Welcome to the Poorhouse

POLITICS MAY 18, 2011

Welcome to the Poorhouse

BY JONATHAN CHAIT

Jerry and Helen Peterson are a married couple in East Orange, New Jersey, earning $252,000 per year. Jerry, a CPA, and Helen, a public relations executive, understand the need to close the deficit, but don't understand why their taxes have to go up. “I don’t feel rich,” says Jerry, as Helen frowns the worried frown of a woman who has been singled out by the Obama administration for brutal economic reprisal of the sort Stalin imposed upon prosperous peasants. 

Jerry and Helen are not real people. I went looking for couples that earn a bit more than $250,000 and don’t feel rich, and there are plenty of them out there, but it turns out all of them have already been quoted in the national media. It’s a booming journalistic genre, and we’ve run out of real-world examples of the trend, forcing those of us looking to write still more stories chronicling the plight of those facing tax hikes on their slightly-more-than-$250,000 incomes to start making these people up ourselves. Otherwise we’d have to move on to finding people struggling to feed their children on food stamps, or other less-pressing humanitarian stories.

The most recent such story appeared last weekend in The New York Times, but the tragedy has gripped the consciousness of the news media and our elected leaders for more than two years now. The stories all tend to follow certain tropes. One is a lack of understanding of how the tax system works. News stories have focused on people close to the $250,000 threshold—Van Moore, an optometrist in Sevierville, Tennessee, tells The Wall Street Journal he earns “just above $250,000.” (“I’m not poor, but I’m not rich.”) The Times quotes “Mason,” a Yahoo!-message-board poster, who claims an income of $262,000. The Washington Post has a heart-rending feature on a MasterCard vice president raising two children on $300,000 a year.

Obama’s tax increase would apply to taxable income over $250,000 a year—taxable income meaning income minus deductions. Households with a taxable income of $250,000 earn, on average, about $315,000. You hear that, Ricky Metz, Manhattan hairdresser living on $310,000 a year? (The Los Angeles Times snapped her up for a quote—“We feel middle class”—before the hometown papers could swoop in.) You’re probably in the clear, so stop kvetching.

An additional problem is that these tales of woe seem to ignore, or actively fail to understand, the fact that a higher tax bracket affects only the portion of income above the threshold level. Even if we ignored the distinction between total income and taxable income and conclude that families earning $262,000 were paying higher rates, they’d be looking only at a slightly higher rate on that last $12,000. That’s like less than a dollar per day in higher federal income taxes.

But large numbers of Americans, including many economics reporters, seem to think that when you enter a higher tax bracket, your entire income is taxed at a higher rate. In 2009, ABC News published a story about people desperately trying to get their income under $250,000 in order to avoid the coming Obama tax hike (which, in any case, was not then due to take effect until 2011). “We are going to try to figure out how to make our income $249,999.00,” one lawyer told the reporter. A dentist earning $320,000 pondered laying off staff and cutting hours to shave $70,000 off her income. The story presented their actions as a sensible tax-avoidance strategy.

The deeper problem here is misunderstanding of the rationale for increasing taxes on those unfortunate, over-$250,000 souls. The recent Times story sums up the rationale for raising their taxes like so: “Under $250,000, you’re middle class; over it and you’re wealthy.” The story proceeds to ask, “Is it based on a statistical metric of wealth in America—a true dividing line?” The answer, of course, is no. But who cares? Drawing hard-line distinctions among data points arrayed along a continuum is a familiar and not terribly compelling problem. There’s no such thing as a 100-meter time below which everybody is “fast” and above which everybody is “slow.” Yet somehow track coaches decide which runners to slot in which race despite the lack of metaphysical clarity.

The heart-rending stories of the only-somewhat-affluent—“The car is more than a decade old, the vacation home in Sandestin, Florida, comes at a moderate weekly rate,” to quote an actual news story from the Journal—all seem to presume that the important standard here is whether higher tax rates would impose any sacrifice at all. “The bottom line,” the Fiscal Times reports: “It’s not exactly easy street for our $250,000 a year family.”

Of course, that’s not really the point. Sure, many families that would face higher taxes under Obama can’t just buy anything they want. But we have a large gap between revenues and outlays, meaning we’ll need wide-scale sacrifice in order to get on sound footing. The question isn’t whether raising taxes on the upper-middle class is completely painless, it’s whether it’s less painful than, say, eliminating college tuition subsidies for poor kids.

Of all the measures being proposed to reduce the deficit, raising taxes on the rich has not only produced the most angst, it’s also the only one that has been received as a form of moral castigation. The true motivation for the plan was much simpler: The rationale wasn’t that rich people are bad but that they’re able, within reasonable limits, to afford a higher tax burden. And in 2007, when Obama designed his tax plan, it seemed plausible to raise sufficient revenue to close the deficit merely by increasing rates on those who earn taxable incomes of more than a quarter-million dollars per year. (The economic collapse that followed made that promise hard to keep, but Obama would pay a price for breaking it.)

Obama, though, has felt obliged to couch every demand for a return to Clinton-era top tax rates with elaborate, preschool-style assurances that rich people are indeed very wonderful and special people. In his budget speech last month, Obama explained his belief in progressive taxation while cooing, “This is not because we begrudge those who’ve done well—we rightly celebrate their success.”

This didn’t stop Paul Ryan from angrily accusing him of practicing “class warfare.” How else to describe a policy so monstrous it may force Jerry and Helen Peterson to go hungry every Saturday night—at least until the waiter brings their entrée, because they can no longer afford to order appetizers at their favorite restaurant? The humanity.

Jonathan Chait is a senior editor at The New Republic. This article originally ran in the June 9, 2011, issue of the magazine.

Follow @tnr on Twitter.

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94 comments

Karen and Bob Swensen earn $52,000 per year, and enjoy many comforts that those outside of theUS can only dream of. They own two cars, they have just 4 years of payments left on their comfortable 1600 square foot house. They have several flatscreen televisions throughout their house, 24x7 internet connectivity, and a powerful air conditioner to cool the unbearable Arizona summer from a stiffling 103 degrees down to a comfy 72 degrees. "I sure don't feel rich", Bob says, as he twists a wrench on his pride and joy, a 1966 Ford Mustang that he's restored himself. This year, his second son will be headed off to State U, with half of the tuition covered by need and the other half covered by an academic scholarship that both his kids earned. Bob's accumulation of material wealth, and his ready access to healthcare, education, travel, are all what makes the modern world so wonderful. Bob may not feel rich, but he's among the wealthiest people to EVER walk the face of the earth. Just 50 years ago, Bob's material possessions alone would have put him far ahead of even the upper middle class of the 1960s. In fact, Bob lives better than the upper classes of WWII lived. Which is an incredible feat, considering Bob just has a high school education. "I figured out a long time ago college wasn't for me, but I'm good with my hands, and a quick thinker, and people tend to follow my lead", which has served him well as a lead machinist working at a local tooling plant that builds cutting equipment for hard metals. Bob has more than 96% of the people in this world. To the farmer in Africa, there is really no difference between Bob and Warren Buffet. Both can do things the farmer can only dream of. Both can fly anyplace in the world on 24 hours notice. Both will be completely taken car of if they are hit by a car. The farmer? No so lucky. He's not sure he'll have clean water for the next-day meal. He's lost 2 of his 5 children to diarrhea. ------ C'mon, Chait, this is such as easy article to write. When a person works hard, they want to control their money. Would the $50K earner like the UN coming in and mandating that 30% of his pay is taken and given to someone else, with zero say in the matter? Nope. Does that make them greedy? Nope. Does that make them a bad person? Nope. Why is the $250K earner any different? Or the millionaire? Or the guy earning $20K? You've simply drawn a line in the sand. But what do you say to the John Chait that lives in the northern African earning $4K/year and feels you owe him 50% of what you've earned in a year? Do you tell him OK, or do you tell him to piss off? American's are a few % of the population, but we consume more than 25% of the world's resources. And we rake in some 33% of the worlds wealth. Why, when things are this unfair and unbalanced, is it reasonable for us to keep what we've earned?

- seattleeng

May 18, 2011 at 12:43am

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The American machinist and the African farmer don't live in the same national society, and don't pay toward the same commonly utilized services and benefits, and thus are not fellow citizens within a common polity, and thus seattle's comparison is in most respects -- apart from some kind of global guilt-tripping in which the lower-end middle class are apparently the ideal targets -- invalid.

- ironyroad

May 18, 2011 at 1:54am

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seattleeng, No one is asking 50% of the earnings of the north African who makes $4K/year. And no one is asking any poor couple earning more than $250K/year for 50% of their income either ... or at least no one is asking who is in any kind of position to make it happen. As Chait pretty clearly said - we are discussing increasing in tax rates on income over $250,000. If there is any coherent point I can decipher from your statement, it is that it may be $255,000 or $245,000 or $250,001 ... precise number is quantitatively arbitrary at the point of precision. And yes, ultimately it is arbitrary, just like any ruling for punitive damages, at the point of precision, is arbitrary. But arbitrary or not at the point of precision (i.e.: do we rule for the plaintiff $50K or $55K?) is not in and of itself a meritorious argument against the basic rationale or justice of a progressive tax system. And we have a progressive tax system. And people like Chait think it isn't progressive enough. And this article does a fair enough job articulating why. If your problem is with progressive taxation on the whole, say so. You'd be disagreed with, but there's no fault in that and it would at least be coherent.

- dcwood10

May 18, 2011 at 2:09am

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Seattle, I am deeply touched by your concern for the farmers in Africa. It does my heart good. It also has ABSOLUTELY NOTHING to do with the poor people who are the subject of this article, those unfortunate Americans making over $250,000 taxable income/year, who are in such dire straits that our collective hearts must bleed for them. So please stick to the topic.

- Sophia

May 18, 2011 at 2:14am

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Seattle's story seems to defeat his conclusion. He has pictured a man who has succeeded in provided for his family, sending them off to further education, while having been a man of exceptional skills that have kept him a valuable member of his company's staff. This is a great picture of the American dream. So how come the family making 250,000,-- still can't make ends meet and fear a 2,5% tax on income over 250,000,--? What are THEY doing wrong? Couldn't they afford a happy successful lifestyle on 150,000,-- building up a nest egg for themselves and their family? Just what are they doing with all that money, that they seem deprived while Bob Swenson is merryily content? Oh, perhaps they are pursuing status and not happiness? That's there tough luck.

- kras

May 18, 2011 at 4:31am

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I recall a ghastly, shocking segment on CNN a few months ago in which a correspondent seemingly randomly stopped people on a [New York?] sidewalk and asked them to name an annual income amount that they considered sufficient to make a person definitively "rich." The answers ranged from, like, $1 million to $10 million. It's anecdotal, not scientific, but it made me scream at the idiot box that apparently no one believed that a mere, say, $150,000 annual income made a person wealthy. I know Manhattan ain't suburban middleAmericaville, in terms of property value & cost of living, but the responses were disturbing nonetheless. Unrealistic materialism has infected even the mostly immobile middle class. I know Sophia's with me on this one. 6 figures is the good life. Doctor earning $300K is too stupid to hire a decent tax consultant or accountant and thinks he/she needs to shed some income off the top? I'll take that $50,000.01 gift under the table, no questions asked.

- Konstantin

May 18, 2011 at 5:04am

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Chait is right, of course. But what he ignores is that the couple earning $250,000 per year has a large segment of its income subject to the flat, payroll tax, so the couple's effective tax rate isn't much lower (in fact, may be higher) than the couple earning (for example) $350,000 per year. And the effect of the payroll tax is even more pronounced if the couple is a modern couple, with each earning roughly the same income ($125,000), in which case they will incur roughly $30,000 in payroll taxes (payroll taxes, except for the modest Medicare tax, are not applied to income above the wage base, roughly $110,000 per year). My point isn't to dispute Chait but to point out that the upper middle income couple has a darn good reason for feeling not so rich: because so much of their income is subject to the flat, payroll tax, a tax that has no deductions and no exclusions for wage earners (it applies not at all to someone without wages but lots of dividends, interest, and capital gains).

- rayward

May 18, 2011 at 6:52am

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Well, if this is the quality of the reporting, it sounds like we NEED "elaborate, preschool-style assurances". Because the facts on the ground are being soundly ignored -- or converted into "elaborate, preschool-style complaints" about how people don't FEEL rich. Bottom line -- Clinton-era tax-rates, prosperity. Bush-era tax-rates, declining economy. If only the American People could appreciate that, without "preschool-style" hand-holding.

- AllanL5

May 18, 2011 at 8:59am

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Re the Social Security/Medicare tax, you'll note that it's the one tax that those ardent tax-cutting Republicans never mention. Making that highly regressive tax fairer would be a huge break for average middle-class citizens. It would even provide some relief for people making $150,000 to $250,000 a year. However, the reform would raise the tax burden of millionaires, and we DON'T want to do that under any circumstances. Republicans show over and over that they care absolutely nothing about the general welfare of the nation. The rich are all that matter. Paul Ryan's proposed budget is the latest evidence of that.

- DAVIDDREIER@EARTHLINK.NET-old

May 18, 2011 at 9:07am

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rayward -- and most likely some of those higher earners are self-employed or small business owners who pay the full nut in terms of social security, medicare and federal disability taxes (for wage earners employers pick up half). But, why reserve your tears only for the relatively small percentage of the workforce earning $110,000 + a year, and ignore entirely the younger, entry level and working class employees who pay exactly the same rate in payroll taxes on their much, much smaller incomes? The same younger and lower income workers who are being told by Republicans that while the taxes being collected from them are going to provide gold-plated benefits for everyone 55 or older today, including all those lucky duckies 55+ year olds in the top 5-10% of earners (who are likely to enjoy longer life expectancies than contemporaries in the working class), but when it comes to their own retirement or potential disability such benefits are likely to be non-existent? The people who really deserve your tears are those paying through the nose for benefits that a large part of the political class is working hard to ensure they will never enjoy, yet who, unlike the prosperous people you worry about, have insufficient disposable income to put even a little bit of savings and investment aside toward alternate, personal ways of securing their retirement and preparing for the medical care they will need as they age.

- esmense

May 18, 2011 at 9:33am

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I don't know if Seattleeng is rich, but his/her comment sure is. Even so, in the spirit of comity and goodwill, I add my wholehearted agreement to his/her opposition to income redistribution schemes propagated by the UN, with no say in the matter afforded to the affected people. If you see a black helicopter coming your way, hide your wallet and transfer your bank account to the Caymans before they scoop it up!

- Geoff G

May 18, 2011 at 9:39am

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I have a tinfoil helmet that keeps me in regular touch with secret forces arrayed around the world observing the movements of the black helicopters. When the black helicopters come to take our money to Africa, we will be ready to fight to the last libertarian. Once we are rid of them, we can get on about rational life in the modern world in which $250,000 is a lot more than $50,000.

- roidubouloi

May 18, 2011 at 9:50am

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I looked it up and the equally heart-rending "soak the rich" (so-called) tax that FDR imposed in the mid-thirties corresponds to almost exactly the same upper income level, adjusted for inflation and other factors. You know, the levels that made Reagan (retrospectively, after consultation with new wife Nancy and er Dad in the 50s), feel like (welfare laziness?) it wasn't worth working to make more pictures since it all went to the government after a certain level. Made him sad, because of all the gaffers and set people who wouldn't get to work.

- Atlas-Q

May 18, 2011 at 9:55am

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Irony writes: "The American machinist and the African farmer don't live in the same national society, and don't pay toward the same commonly utilized services and benefits, and thus are not fellow citizens within a common polity, and thus seattle's comparison is in most respects -- apart from some kind of global guilt-tripping in which the lower-end middle class are apparently the ideal targets -- invalid." And alas, what common benefits does the guy earning $250K share with the low-income earner in Cohn's article? Roads? Military? That's it? And that is my point: The US trajectory is such that those that pay are getting very little from government (and could easily provide the services they do get from the private sector at a much reduced cost)...the government has become a mechanism to transfer the wealth, not provide common services. The services the government provides increasingly are being means tested away from anyone that has done a shred of planning in their life. This is why I keep stating the government needs to benefit everyone, and the everyone needs to pay. Like Europe. What we are building today is a mess.

- seattleeng

May 18, 2011 at 10:02am

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Seattle": What do you get (rich and poor, all of us)? One hopes, the best nation in history. Sorry I cold not specify which highway or vacation home is the one with your name on it as a result of our collective American way of life. (But I hope you have one!)

- Atlas-Q

May 18, 2011 at 10:07am

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Krassumusen writes: " This is a great picture of the American dream. So how come the family making 250,000,-- still can't make ends meet and fear a 2,5% tax on income over 250,000,--? What are THEY doing wrong?" It's not the 2.5% tax that is feared. It's the 2.5% tax that turns into a 8% tax, combined with means testing on social security and medicare. Suddenly, those all combined with increased state and local to mean that 70% of every dollar a $250K earner goes to the state/local government. I think everyone here believes means testing on SS and medicare should happen, and I think everyone here wouldn't even blink at the 2.5% increase in effective tax rates turning into an 8%. Hell, Roid has advocated effective tax rates on millionaires of 50% before SS, Medicare and State and local

- seattleeng

May 18, 2011 at 10:07am

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Sophia writes: "It also has ABSOLUTELY NOTHING to do with the poor people who are the subject of this article, those unfortunate Americans making over $250,000 taxable income/year, who are in such dire straits that our collective hearts must bleed for them." Except, the poor people you note aren't poor. They have more than 99% of the people that have ever walked the face of the earth. What is with all this envy you have Sophia? Do you not understand how little the rest of the world has?

- seattleeng

May 18, 2011 at 10:11am

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Seattle: So you admit the increase in question of 2.5% is not really a problem. Your problem in fact is the apocalyptic fantasy of the deluge of socialism it will immediately usher in, at least as I understand you. Signed, Not Envious

- Atlas-Q

May 18, 2011 at 10:18am

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Prozpero: "I looked it up and the equally heart-rending "soak the rich" (so-called) tax that FDR imposed in the mid-thirties corresponds to almost exactly the same upper income level, adjusted for inflation and other factors." A homework question for you: What was FDR's income, including investments, and what effective tax rate did he pay? Answer: He earned $93K in 1937 (about $1.3M today) and he paid $15K in taxes. That's 16% of his salary he paid in taxes. Extra credit: Nixon earned $736K (over $1M today) and paid $72K in taxes. That's 10% of his income paid in taxes. Both of these guys today would be paying double (for FDR) and triple (for Nixon) in taxes. Our taxation levels today are much, much higher today than they have EVER been. Loopholes have been closed is the primary reason.

- seattleeng

May 18, 2011 at 10:18am

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Roid writes: "When the black helicopters come to take our money to Africa, we will be ready to fight to the last libertarian." You are aware the UN is full people that want varying levels of taxes placed on the wealthy nations to help poor nations. Obama has pledged himself for $850B in aid through 2015. Obama's science guy has spent his life calling for a tax on the US that is 25% of US GDP to help poor nations. And countless others, including former UN general Ban Ki Moon ave proposed various huge taxes on western nations to help others with poverty, to mitigate global warming, etc. As I've said previously, there is a guy named Roid living in the middle east that believes EVERYONE in the US should be taxed at 50% level and that money should be then given to everyone else in the world. Why is he wrong? Why should we NOT do that?

- seattleeng

May 18, 2011 at 10:24am

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Seattle: I beg to strongly disagree with your choice of "facts" and your interpretation of them. In my view, you are simply not correct, based on my set of facts, which are rather reliable and established among serious people. (And please don't attack me for not going into all the nitty gritty details---which I could---simply because I think the truth is well established out there for those looking for it, and other forums can provide that extended debate.)

- Atlas-Q

May 18, 2011 at 10:25am

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Prozpero writes: " So you admit the increase in question of 2.5% is not really a problem." Yes, of course, just 2.5% isn't a problem in the long term. Will that be the final request EVER? Or is the push for higher taxes going to be on-going as it's been since 1913? What do you think is the upper bound a family earner $250K should pay for taxes EVER? In other words, where do you think your average socialist whack-job would say "Man, holy cow, that's a lot of tax for a husband and wife fire chief and a vice principal to be paying. We should dial things back"

- seattleeng

May 18, 2011 at 10:35am

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Middle class is a frame of mind and relationship to society, not a specific income level. People can be middle class on $50K/year, and still be middle class at $250K/yr. I live a very middle class (some wouldn't even call it that) life, despite being fortunate enough to have income that last year put me in the top .5% of family income in the US. Not too long ago, my family lived on less than 1/6 of that, but out life style has barely changed. Class isn't the issue here, the issue is how much we individually have benefited from the opportunities created by the American educational, political and economic system, and how much of that we owe back. I for one am acutely aware that I am as fortunate as I am due in large part to societal investments in my education, in R & D that paved the way for the success of the companies I've worked for, in a safety net that kept me alive when I needed health care, and whole when my family hit hard times. Ability and hard work complemented all of these, but that same ability and hard work without those societal investments, would have left me basically a subsistence farmer. So, I've been fortunate. I have no issue with paying back in the form of higher taxes. And, notwithstanding that I am as middle class as they come, I have no illusions that measured solely by my income and assets, I am extremely well off compared to most of my fellow citizens, and filthy rich compared to most people in the world.

- IowaBeauty

May 18, 2011 at 10:42am

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I too have found many otherwise-smart friends who also think that when their incomes top a certain bracket-line, ALL of their income is taxed at that higher rate. I wonder how much of this confusion stems from the fact that we now have so few tax rates? Time was, there would be a dozen or more tax brackets, so no one was tempted to the phrase, "I'm in the X tax bracket." One has to wonder how much of this confusion was precisely the intention of recent reformers-- as well as the conflation of "tax simplification" with "fewer tax brackets."

- billhub

May 18, 2011 at 10:45am

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Good article Jonathon. I agree with some here that it's relatively low-hanging fruit, but it's great to see the clarification that blows the anti-tax fog out of the room. I almost fall out of my chair laughing at folks you believe that all of their income will be taxed at the higher rate and not just the increment above $250,000.

- Lundell

May 18, 2011 at 11:00am

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seattleeng: "Our taxation levels today are much, much higher today than they have EVER been." Not according to Felix Salmon. http://blogs.reuters.com/felix-salmon/2010/12/06/chart-of-the-day-u-s-taxes/ He says (along with many others) that federal taxes as a percentage of GDP are the lowest they've been in 60 years. And the effective federal tax rate on the top 1% has dropped from 1995-2006 (the last year that I've been able to find data). http://economix.blogs.nytimes.com/2009/04/08/how-much-americans-actually-pay-in-taxes/ So I don't know what is meant by "taxation levels," but it seems to me that whether one pareses it in terms of revenues or rates, they're nowhere near as high as they've ever been. "It's not the 2.5% tax that is feared. It's the 2.5% tax that turns into a 8% tax..." Except that this "fear" hasn't happened. Recently, it's been just the opposite. Taxes have been cut, with most of the benefits going to the wealthy. The estate tax has been reduced drastically. Yet now raising rates is met with cries of "socialism!" Why is the baseline what we have now instead of the Clinton-era rates? "This is why I keep stating the government needs to benefit everyone, and the everyone needs to pay." Everyone who works does pay federal taxes. And programs benefit everyone: if we believe that the family that makes $20k should still be able to educate their kids--because it makes society better for everyone through a better educated workforce and, we hope, better jobs--then the wealthy will have to pay more. As I've said repeatedly, it's not about penalizing the wealthy; it's a necessary consequence of apportioning the costs of running these programs. Plus there's the argument that none of us know ahead of time whether we will be wealthy, so it would be entirely rational to enter into an agreement where I'd help fund your parents' retirement and medical costs if you help find those of my parents' to make sure neither of us go bankrupt caring for them out of pocket.

- dsimon

May 18, 2011 at 11:05am

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Iowa, I'm about as middle class as they come to, with two cars in the driveway that are nearly 10 years old. But I believe it has been the private sector that has largely put America where it is today. Sure, the government has helped in a few areas (and the contribution of the founding fathers and their framework has been enormous). But by and large, the government does best when they get out of the way. Our success has largely been because we allow innovators to keep much of their innovation. That is why people from all of the world want to come to the US to innovate. That is why France didn't create Facebook or Google or Intel or Microsoft or Apple. It is this innovation engine that has delivered our prosperity. Not the government. If it were simply a government that could create prosperity, then it'd be a recipe the entire world could easily follow. Your position is interesting in that if you believe our low-tax, laissez-faire government has put us where we are today, and if it's clear that, say, France or Sweden's government with their overbearing taxes and control has damaged their ability to compete, then don't you worry that the closer we to drift to those styles of government, the more we hurt productivity?

- seattleeng

May 18, 2011 at 11:11am

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Sorry, the rest of my prior post got eaten... ...And the effective federal tax rate on the top 1% has dropped from 1995-2006 (the last year that I've been able to find data). http://economix.blogs.nytimes.com/2009/04/08/how-much-americans-actually-pay-in-taxes/ So I don't know what is meant by "taxation levels," but it seems to me that whether one pareses it in terms of revenues or rates, they're nowhere near as high as they've ever been. "It's not the 2.5% tax that is feared. It's the 2.5% tax that turns into a 8% tax..." Except that this "fear" hasn't happened. Recently, it's been just the opposite. Taxes have been cut, with most of the benefits going to the wealthy. The estate tax has been reduced drastically. Yet now raising rates is met with cries of "socialism!" Why is the baseline what we have now instead of the Clinton-era rates? "This is why I keep stating the government needs to benefit everyone, and the everyone needs to pay." Everyone who works does pay federal taxes. And programs benefit everyone: if we believe that the family that makes $20k should still be able to educate their kids--because it makes society better for everyone through a better educated workforce and, we hope, better jobs--then the wealthy will have to pay more. As I've said repeatedly, it's not about penalizing the wealthy; it's a necessary consequence of apportioning the costs of running these programs. Plus there's the argument that since few of us know ahead of time whether we will be wealthy, it would be entirely rational to enter into an agreement where I'd help fund your parents' retirement and medical costs if you help find those of my parents' to make sure neither of us go bankrupt caring for them out of pocket. We all benefit from such insurance, even if we don't wind up needing it in the end.

- dsimon

May 18, 2011 at 11:25am

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I am busy throwing up at this story. Especially when you have a CPA who doesn't seem to understand that the extra tax is only on the amount above $250,000 - I would not want him advising me on my taxes. And yes people you are rich - materistically anywhere. When you have people trying to make ends meet on very little, because their unemployment has run out and they have to decide whether to pay rent or eat.

- susie619

May 18, 2011 at 11:25am

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dsimon writes: "Not according to Felix Salmon" Go ahead an peruse old federal tax returns as filed by past presidents it's interesting for sure. Obama grossed $1.7M in 2010 and paid $453K in tax, or 26.6%. In 1992, Clinton grossed $290K and paid $70K in taxes. That's 24.1% In 1982, Reagan grossed $741K and paid $292K. That's 39.4%. In 1981, Reagan grossed $412K and paid $165K in taxes. That's 40% In 1977, Carter looks to have earned $190K and paid $48K, that's 25.2% And FDR and Nixon are quite a bit lower. So, outside of Reagan's taxes (which he did himself and were written in pencil), our leaders throughout time and paid effective taxes rates that are the same or lower than today. See www dot taxanalysts com for all the presidential returns.

- seattleeng

May 18, 2011 at 11:26am

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DSimon writes: " Taxes have been cut, with most of the benefits going to the wealthy." No, of the roughly $300B in Bush tax cuts, only $70B of those went to the wealthy, while the rest went to everyone else. That said, in order to get a tax cut, you have to first pay taxes. So, for the the half the population that doesn't pay any taxes, it's hard to really cut their taxes. DSimon writes: "Everyone who works does pay federal taxes." In name only. Everyone that pays $1 to medicare today will get $3 back if they live to be 65. Same with social security, but with a lesser return. These are forced savings/retirement programs. They are not taxes that contribute to building society. They exist simply to benefit that individual. Can I call my 401K a tax? Can I call my savings a tax? No. If you want to be pedantic, then let's say 55% of the population is not contributing to paying for our government. They are simply paying for their own future. Which is really something they should be doing on their own when you think about it.

- seattleeng

May 18, 2011 at 11:36am

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IowaBeauty:"Middle class is a frame of mind and relationship to society, not a specific income level." I think there are many psychology studies that bear this out. Evaluations are made in large part by who one associates with, so people making $250k who hang out with people who make similar amounts may not "feel" all that wealthy. And if they associate with those who make even more, they may feel even less so. There's apparently a "keeping up with the Jones's" effect which overrides objective data.

- dsimon

May 18, 2011 at 11:38am

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seattleeng: "Go ahead an peruse old federal tax returns as filed by past presidents it's interesting for sure." And irrelevant to what I wrote, which was that federal revenues are at historic lows as a percentage of GDP. Returns by past presidents have nothing to do with that claim. And as far as individual returns go, I could just as easily point to Warren Buffett's as evidence that taxes are lower. "of the roughly $300B in Bush tax cuts, only $70B of those went to the wealthy, while the rest went to everyone else." And the wealthy are a very small segment of society, so they benefited tremendously disproportionately compared to "everyone else." Families in the middle quintile had their effective federal tax rate go from 5% to 2.9% in 2004. Households in the top 1% had their rate cut from 24.2% to 19.6%. http://www.nytimes.com/2007/01/08/washington/08tax.html So that's a larger rate cut on a far larger income. I'll revise my description to "hugely disproportionately benefited the wealthy" if it will make you happy. "DSimon writes: 'Everyone who works does pay federal taxes.' "In name only. " No, everyone who works pay payroll taxes. "These are forced savings/retirement programs. They are not taxes that contribute to building society. They exist simply to benefit that individual." You must know that that's an absolutely false description as to those programs work. Today's payroll taxes fund today's retirees. One's own payroll taxes don't benefit any "individual." As I wrote above, they help reduce the chance that any of us go bankrupt if our parents happen to get sick or run out of what they saved for retirement. They are social insurance programs, not forced individual savings programs.

- dsimon

May 18, 2011 at 12:05pm

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On a completely different subject, are other people using this site getting an incredibly annoying little pop-up box that says "Start below fold," which usually causes your browser to crash (or at least Firefox)?

- DAVIDDREIER@EARTHLINK.NET-old

May 18, 2011 at 12:06pm

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Seattleeng -- If you live in Seattle and you are an engineer your livelihood is or has been directly or indirectly supported by the federal government. You live in a state with two huge disadvantages in terms of economic development; 1) location (relative to more advantaged parts of the nation, distributing products produced in the Northwest corner of the country to the rest of the country has always been costly and time consuming), 2) a complete lack of the oil and gas resources necessary for the development of an industrial. Early on the state's politicians sought (with great success) to make up for those shortcomings with well-conceived pork barrel politics. The state's gilded age, which you apparently have benefitted from, happened about a decade after the one experienced in better situated parts of the countries -- and wouldn't have happened at all without DECADES of significant federal investment in the region through military spending, direct support for our high tech industry, energy investments, investments in modernizing our ports and related transportation resources (to benefit trade with the Pacific Rim), etc., etc. The primary reason the Puget Sound, for instance, has always outperformed neighboring Oregon economically is this; we have long had much more committed and able exploiters of the federal purse within our political establishment. Your handle makes your opinions especially laughable. You many want to get a new one.

- esmense

May 18, 2011 at 12:17pm

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Previous comment should have read "development of an industrial base."

- esmense

May 18, 2011 at 12:18pm

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Seattle, I know you're very new to the TNR website and Jon Chait's postings, but if you take some time to search back in the archives, I think you'll see that over the past decade or so, Jon, and other authors, have pretty much rebutted all the misconceptions and bias's your story at the top and subsequent comments lay out. Take some time to do some back reading, and, welcome to TNR. It's good to have new posters.

- jet

May 18, 2011 at 1:17pm

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Jerry and Helen of East Orange NJ certainly aren't real. With a $250K income, they'd more likely be living in West Orange or Roseland. East Orange is a bit close to Newark for the professional classes, and median household income is $32K/year. West Orange has lots of green space and big houses; families make over $90K/year. (Maybe Jon would have been more comfortable picking somewhere in Michigan...)

- stanalama

May 18, 2011 at 1:20pm

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seattle will make one false claim after another. When confronted with reliable evidence that his claims are false, he simply repeats them.

- roidubouloi

May 18, 2011 at 1:41pm

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seattleeng, patronizing jackass of the year. What the hell do you really know about the poor anywhere? I will tell you one thing and this from a person who has lived for 15 years in third world areas, I would rather live off of $5,000 in China than $25,000 and have to live in Newark NJ. I spend a lot of time in Santa Maria Xidani where the average income amounts to only around $5,000. I will tell you one thing you patronizing jackass, life is not bad there, not at all. You are your pathetic notions that the number of flat screen tv's or how much you refrigerate your house is not indicative of real happiness. And frankly I don't see what the hell it has to do with US tax rates either except you bring it up to show off your self satisfied and smug sense of superiority. As to tax rates, are you in favor of the US becoming a banana republic akin to Guatemala, where there is a small subset of very wealthy people and the rest just get by? So much stupid bullshit. You have a materialist and smugly elitist frame of mind without any true concern for anyone other than yourself and your possessions. I see through your bullshit.

- blackton

May 18, 2011 at 1:58pm

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Seattle continues to confuses federal income taxes with a person's total tax load, especially payroll taxes. Otherwise I cannot fathom how anyone can make the statement "That said, in order to get a tax cut, you have to first pay taxes. So, for the the half the population that doesn't pay any taxes, it's hard to really cut their taxes. " Actually it's really easy to cut their taxes. And Obama has done just that. It is true that it's not easy to cut the income taxes paid by the bottom 50% of wage earners, since they don't pay any, but that's a far cry from the completely false notion that they don't pay *any* taxes. They don't pay as much of the total receipts, but seriously, the reasons for that should be pretty obvious. However since we're talking about raising taxes on the top 2% of wage earners to close the deficit (and start paying down the debt), I totally fail to see what the bottom 50% have to do with anything, other than to act as a red herring. He is also apparently still confused about what has funded a non-trivial amount of government spending for the last several decades (Social Security surplus funded deficit spending). "These are forced savings/retirement programs. They are not taxes that contribute to building society. They exist simply to benefit that individual. " Actually, not at all. Those nice SS surpluses have been spent, basically as standard general revenue, as the number of T-bills held by the SS admin attest to. Large military, moon shots, whatever. Spent. Gone. As for "And alas, what common benefits does the guy earning $250K share with the low-income earner in Cohn's article? Roads? Military?" I'd say that the obvious answer is a strong, growing and stable country, in which everyone has the opportunity the improve their lot, or at least the lot of their children. This stability has also clearly benefited the guy earning $250K quite a lot (unless we're indulging in fantasies that the world would look no different if the government just went away). There seems to be some fantasy that the poor will just go away, or be happy with their lot (as long as they're earning more than an African farmer!). Unless Seattle is proposing we scrap the whole democracy thing, we know exactly what happens when a sufficient percentage of the population become so dissatisfied with their lot that they no longer see preservation of the status quo and beneficial to them as well. And again, to bring the point back to that of the article, the guy earning 250k (after deductions) has a lot more to lose if we don't solve the debt in the long term. Mostly as he is much more likely to have savings and assets that will be devalued if we eventually inflate our way out. The person who lives paycheck to paycheck will be obviously be affected by the instability of inflation, but their wages will go up. Life will suck a lot more when credit dries up, but I rather suspect the guy with savings has a much greater interest in solving the problem to maintain his wealth. And finally, this argument: "Yes, of course, just 2.5% isn't a problem in the long term. Will that be the final request EVER? Or is the push for higher taxes going to be on-going as it's been since 1913?" almost doesn't warrant a reply. Given that the rich always accumulate the most political power, and they exert strong downward pressure on tax rates (at least the ones they pay, like capital gains) I feel very safe saying that a 2.5% increase today is not going to suddenly blow the lid and result in tax rates climbing until we reach Swedish levels. Isn't going to happen. However if we modestly increase taxes on the top 2%, I am also willing to categorically say that we will NOT see a flight of entrepreneurs and other engines of the economy to other countries. Didn't happen before, hasn't happened, isn't going to happen now. The reasons that these people come to the US are myriad and complex; but there is no compelling evidence that changes in the tax rates that we are talking about will have anything but the most peripheral effect on these reasons.

- Nari224

May 18, 2011 at 2:10pm

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No EVIDENCE? Of course there's no evidence. All we have are a bunch of people cruising off Supply-Side Economics (also called "The Chicago School") and the idea that lowering tax-rates on the wealthy AUTOMATICALLY improves the economy. That's the dogma. And they embrace the dogma without, and in spite of, any evidence to the contrary. And I suppose it improves THEIR economy a bit. The problem is, the Laffer-Curve simply doesn't work -- they don't create jobs with those additional dollars, instead they inflate the stock-market with them. The result is the rich get to hold a LOT more of the wealth in the nation, while the poor and working-class see their standard of living decline slowly. I know, let's try an experiment -- let's return America to Clinton era tax-rates, and COLLECT EVIDENCE about what the effect is.

- AllanL5

May 18, 2011 at 2:37pm

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Even the dimwitted Reagan figured out it was easier to cut taxes than to raise them. The irresponsible Bush tax cuts had a built-in end date raising them back to previous levels - no legislation needed. Had we allowed those cuts to expire we could have been talking about Obama tax cuts for the less-well-to-do. Legislation raising taxes on the rich, however, you define it, cannot be done. DMcMahon

- NR138704

May 18, 2011 at 2:58pm

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Seattle, Nari pretty much nailed it, and also exposed your bigotry against your fellow Americans for what it is. Basically, you don't feel the rich really have much in common with other Americans so - why should they (you?) contribute a fair share to our country. What you're really saying is, you guys want your own country. Fine. Move. See what it's like to live where you'd be a virtual King Farouk - in Somalia, for example.

- Sophia

May 18, 2011 at 3:48pm

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seattle: "what common benefits does the guy earning $250K share with the low-income earner in Cohn's article? Roads? Military? That's it?" Well, citizenship, most importantly. And that in a country that has, along with roads and defense capability, three levels of law enforcement; a complex but mostly credible court system; a functioning government that is involved in managing such crucial things as the natural environment, public health protection, and air traffic; a legacy of state universities that often provide an excellent education at a very competitive cost; a postal service that still delivers in remote areas for the price of a stamp; targeted tax breaks (some justified) for businesses and corporations; a medical coverage plan for those over 65; federal disaster relief that is sometimes very badly needed (see recently in the South, from tornadoes to flooding); investment in transport and energy infrastructure; and and and. Try living in a defenseless nation without proper roads, e.g. the libertarian paradise of Somalia, and you wouldn't be saying "That's it?"

- ironyroad

May 18, 2011 at 3:57pm

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Seattleeng: I have worked in the private sector, both in large and entrepreneurial startup companies, been self employed, worked in the non-profit sector, and worked inside government (on a private payroll). I know where innovation happens and doesn't. I would be the last person on earth to undervalue what private enterprise can and does do to motivate people. But, and it's a damned big but: 1) We don't pay particularly high tax rates, compared to the the past in the US, or to the rest of the world. Your arguments to the contrary (using presidential returns) are ridiculous. You can't look at such a small highly selected sample and conclude anything. Look at taxes as a percent of GDP to get the real picture. 2) This debate is not about raising taxes on median income or below earners. In fact, it's about people at 4X or more of the median income. Cry me a river, but the fact is that raising my taxes a bit at the margin won't change a bit how I approach my work, or in any way decrease my quality of life, and I think that's generally true for people in my bracket. If it's not, they measure of quality of life damned strangely. 3) I never claimed government is the source of innovation. But it is the source of funding for education, for a very large percentage of fundamental research that drives innovation in the private sector, and for our overall welfare. If you think your employer gives a shit about whether you have food and housing and medical care once you retire, I have some investments I'd love to talk to you about. If you think the vaunted private sector is funding basic research at anything like the levels an innovative economy needs, you're living on a different planet than me. I know, I work in private high tech. Let me give you an example: everything about facebook or google, except the business models, has roots in government funded R & D: They run on Unix (actually Linux, but Linux is a copy of Unix); they use HTML and web browsers to deliver their business model. HTML is a dialect of SGML, which was created originally out of government funded work, and turned into HTML by (horrors) a European scientist on government funded academic payroll. Web browsers all owe their basic lineage to a project at the University of Illinois. The massive parallel infrastructures at facebook and google reflect work on parallelism in computing that the government supercomputer projects funded for decades. Googles founders invented their basic approach to search while PhD students at Stanford, in a program that simply would not exist if not for government support over the years. If you don't like computer examples - just try to find basic medical advances that don't have deep roots in government funded and RUN biomedical research. If, more personally, you'd like to know why I've been able to succeed in both industries (high tech and life science), it's owing to a government funded education that went on for 20 years. 4) The social welfare function of the government matters directly to the success and freedom take risks of the private sector. For example, I can save most of what I earn because I am not directly supporting my parents, which I would be, were it not for social security and medicare. That has allowed me to take risks, switch careers, .... That's how I got to the point where I am a) quite well off, and b) making the kind of contributions to the country's base of innovation in the private sector, you like to trumpet. You want to live independently, without benefit of any of these government "interventions" in the free market. Good on you. My neighbors do. They're Amish. Wonderful people. Haven't innovated a damn thing you'd care about in generations. Then there are my other neighbors, who didn't bother to take advantage of educational opportunities, or look for ways to leverage the country's knowledge base. We call them white trash.

- IowaBeauty

May 18, 2011 at 4:01pm

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The argument that because people are ABLE to pay more taxes they SHOULD pay more taxes has always struck me as a bit moronic.

- rvogel

May 18, 2011 at 4:33pm

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Politicians and useless government employees caused the problems; let them sacrifice. I am self-employed and have saved money since I was 13 yet, to be financially secure in old age, I will need to work until I'm at least 70; they retire at 55 with guaranteed pensions and lifetime free health care. I pay for that but I don't get it. I see thousands and thousands of people working "off the books" for cash and buying houses, getting food stamps, free health care, subsidized higher education for their kids. And I am damn tired of paying for it. And how about the $120,000 life guards, or the $160,000 per year bus drivers. I pay for that with my taxes, too...AND, as "public safety" employees, life guards get the same pensions as the police and fire fighters: retire at 50 with ~90% pensions. The $50,000 guy gets free college for his kids; I pay $100,000 for mine. He pays moderate property taxes; I pay $1,000 per month to live in the house that I "allegedly" own. And on and on and on.

- dalefogden

May 18, 2011 at 4:35pm

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One wonders what alternate reality you live in, dale. a) What "useless government employees" sold mortgages they knew couldn't be repaid, exactly? b) I work for the federal government, where we get probably the best deal, on average, of any government employee at any level. None of us get free healthcare ever, period, whether we work to 55 or 100. And our pensions are guaranteed, sure, but only when the Republican Congress isn't forcing Treasury into using our pension fund to keep the country from literally going bankrupt. c) Where are you that lifeguards get paid the same as police and firefighters, exactly? Everywhere I know of, lifeguards are people in their teens and twenties getting minimum wage and no bennies beyond use of the pool. If you can find me someone outside of southern california or florida who gets a pension from having been a lifeguard, I'll be stunned. Good to see your thinking summed up in one sentence, though. "I pay for that but I don't get it." You pay for my salary but don't get it; true, but I also pay for the interstate highways you drive on and the FDA inspections that make sure your steak doesn't kill you, and what concrete benefit do I get from those expenditures? These seem to be unavoidable consequences of having a society that consists of more than one person. Is your point simply that you resent other people for existing?

- janus

May 18, 2011 at 4:47pm

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Ah yes...the wealthy middle-class straw-man that Seattle trots out every time anyone suggests raising income taxes on those making over $250,000 a year gross having paying a slightly higher marginal tax rate than they do now. In fact I'd be hard pressed to find any family making $50K a year on a machinist's salary that affords that lifestyle so described. And then the relativism comparison to standards of living from 70 years ago is laughable at best. Today's African farmer ergo should count himself as the neolithic Warren Buffet compared to his Australopithecus forefathers. The point being? That raising taxes on the top 2% income earners amounts to highway robbery and those less "fortunate" to count yourself lucky you're not forcibly shipped to the Congo. As someone whose combined household income is less than $100K/year with college educations, working in the private sector in an industry crushed by the recent recession, let me say right now I don't feel richer nor am I "richer" than my counterparts in other countries relative to quality of life or what I "get" when paying taxes. And this includes my architectural peers in Australia, Argentina, Mexico, South Africa, Japan, Germany, Canada. The parity of those making relative to what I make is near equal except most of them having access to better, more affordable healthcare, lower or equal costs of living, access to mass transit, higher qualities of life (personal vs. working time). We don't own multiple flat-screen TVs, don't have cable or satellite, our educations were bought and paid for through low-interest student loans. We had to cash in part of our "retirement" to put a down payment on our first house. Our healthcare insurance is marginal with my wife's employer offering her a very good plan while my employer has HSAs with high deductibles. Should be grand when we decide to start a family knowing the cost burden of even having children is so high that in order to afford them you have to make over $250K a year or live at or close to economic collapse barely squeaking by. I find the paucity of legitimate reasons for not raising marginal tax rates on those making over $250K a year beyond the "it's socialist raping the wealth producers" excuse as neither real or addressing the actual issues of income disparity that is driving down the overall social stability of the country. I find the cries of "class warfare" trumpeted by the Right as false, disingenuous, and morally dubious considering that they've been practicing class warfare against the working classes for the last 40 years.

- singlspeed

May 18, 2011 at 5:36pm

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I guess our good friend dalefogden made some bad choices in life and didn't jump on the government employee gravy train. Apart from the bit where he did not succeed in his bid to be Governor of California that is. Top marks for stretch goals and all that. Although I am curious as to what the Libertarian platform is for solving the problem of people working "off the books" - remove the exemptions from minimum wage for servers etc. and intrude the government further into the lives of everyday Americans? Seriously, anyone who didn't jump at the opportunity to be a life guard for $120k deserves their lot in life. If that's paying high taxes for the apparently smarter people, then so be it.

- Nari224

May 18, 2011 at 5:42pm

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rvogel: "The argument that because people are ABLE to pay more taxes they SHOULD pay more taxes has always struck me as a bit moronic." Maybe because few people make that argument. The argument is about fairly apportioning the costs of running society: providing education, some base level of health care, military, infrastructure, defense. Few people think that those who are struggling to put food on the table should forgo education for their kids, so wealthier people will have to subsidize that service. And even under a flat tax, those who make more will pay more. If someone has a viable system where the poor pay as much as everyone else, I'd love to see it. That those who are able to make more pay more is not a result based out of "class warfare"; it's a near logical necessity if we're going to exempt lower-income households, or at least not require lower and middle-income groups to pay their own way for everything.

- dsimon

May 18, 2011 at 6:08pm

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rvogel If you collect more from the people who are able to pay more, you don't have to collect more from the people who don't have the money to pay. When the Republicans recklessly cut taxes it put pressure on the government to find revenue with more enforcement. More audits. More IRS seizures. More criminal charges brought against non-payors. The government now takes homes from married couples even if one of them does not owe taxes. And it is going to get worse because Cheney felt that deficits don't matter.

- Nusholtz

May 18, 2011 at 7:56pm

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Come on, rvogel: we're not asking wealthier people to pay more taxes just because they're able to. Right now governments (and not just in the US) are cash-starved, that's why there are deficits. All over, governments are cutting, and it's not just waste. Cuts to education, research, and infrastructure are killing the future economy, and costing our children opportunities. Who will build the schools, the transportation, the scientific structures for the future? Not the private sector, which is focused on profits now-now-now (see IowaBeauty's 4:05 response above for details.) Going back to Clinton-era rates (which didn't seem to kill innovation at Apple, Microsoft, or scads of other high-tech companies in the 90s) seems a quite responsible plan. US tax rates will still be significantly lower than most other industrialized nations-- including a large number which spend a small fraction of the US defense budget.

- stanalama

May 18, 2011 at 8:19pm

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Irony writes: "Well, citizenship, most importantly. And that in a country that has, along with roads and defense capability, three levels of law enforcement...." But Irony, these things you mention cost very little. Our taxes go into 4 large buckets that are interesting to consider: 1) Military. 2) Building and maintaining infrastructure. Schools, military, science research, roads, courts, etc. 3) Forced retirement programs such as SS and Medicare. 4) Transfers of wealth, aka welfare #1 (military) is clear. It's about $685B a year, and $150B of that is paid to people for working. #2 (infrastructure) is easy. Every gets the value of this. This bucket is about $317B for police, courts, prisons, education, transportation, etc. #3 is easy. As long as I get a positive return, everyone is OK with this too. I pay in X dollars, I get back X plus a little more. Fair enough. #4 is where our "bang for the buck" gets really, really bad. This bucket is about $1T in size when you include the transfer elements of SS and Medicare. And about $600B if you don't. What happens usually during tax discussions is the bait and switch. You bring item #2 (infra/schools/security), but doubling that could be easily done just be eliminating the Bush tax cuts. This is cheap. But that isn't the bucket you are after, is it? I suspect the bucket you are after is the "transfer of wealth" bucket, isn't it, and it's nearly $1T size? And since the performance of this category has been so poor--one of the historically worst returns on investment the world has ever seen, shouldn't we resist doing more of the same there? We can all agree the military can be trimmed back. We can all agree infrastructure spending should rise. We can all agree that as long as the gov can keep medicare and SS solvent that contributing more there isn't a bad thing as long as I get it all back. It's this item #4 where out track record is so poor that really freaks everyone out. I apologize in advance if I have you pegged wrong. But the bucket #2 that you brought up just isn't even really big enough to debate, nor is it controversial.

- seattleeng

May 18, 2011 at 8:46pm

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Dsimon writes: "Maybe because few people make that argument. The argument is about fairly apportioning the costs of running society: providing education, some base level of health care, military, infrastructure, defense. " See the numbers that I just posted. The costs for this aren't terribly expensive. We can easily do all this. But just doing this won't make you happy, will it? You have something a bit grander in mind don't you?

- seattleeng

May 18, 2011 at 8:50pm

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seattleeng You need to review the impact of wealth transfer on the economy before you condemn it. Years ago, one summer, I worked in an appliance store and one of the salesman explained to me how sad it was that people came in with their welfare checks and bought televisions, but he never turned them away. Unemployment and social security have a far greater stimulative effect on the economy than tax cuts on the wealthy. http://www.correntewire.com/mark_thoma_economic_benefits_unemployment_compensation

- Nusholtz

May 18, 2011 at 9:00pm

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Perhaps you are right for stimulating the economy (although Obama's money gal seemed to disagree). But stimulating the economy is only a short term goal. We are talking about a longer-term strategic direction. And I think the detrimental impact of high taxes on economic growth are well established and not disputed. Sweden in the 1960's was taxed at a level similar to the US. And their per-capita GDP was 20% higher than the US in the late 70's. But their taxes climbed through the 60's and 70's, their social programs grew larger, their growth slowed, and by 2001, the US per-capita GDP was 56% higher. In 1970, Sweden had the fourth highest average income in the world. By 2000, they had fallen to 14th. What has dragged their numbers down considerably is that some 20% of the working age population just doesn't work. Sweden workers take more sick days than any other work force in teh world. It is a big problem. There is a saying in Sweden about a product that breaks..."it was made on a Monday" because that is the day most call in sick. Read what Swedish Economist Johan Norberg has to say. Not all of this applies to the US, but there is a tale of caution in here that is important to understand about an ever expanding welfare state. http://www.johannorberg.net/?page=articles&articleid=151

- seattleeng

May 18, 2011 at 10:36pm

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I'm sorry, but what is the question being debated? Should there be taxes, should tax rates increase with wealth, are taxes too high, is government spending too high, should taxes ever be raised? Does anyone here have an idea how to determine if taxes are being levied fairly or is this just a question of liberals thinking low income people need more help (which the wealthy can afford to give) and conservatives (SeattleEng) thinking that wealthier people are already having too much of their hard-earned money taken by the government?

- dmresnick

May 18, 2011 at 10:54pm

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Seattleeng "And I think the detrimental impact of high taxes on economic growth are well established and not disputed." This is an important point where I disagree. Clinton's rates were higher without negative impact. The rates are low now on the wealthy with no good coming from it. Saudi Arabia has no taxes and it is not wonderful. One thing is for certain. Other things are far more important on the economy than the tax rate of the wealthy. And I think government plays a role in fostering those other things. If you want to fund the government, progressive rates are just a more efficient way to collect revenue for every dollar level of collection.

- Nusholtz

May 18, 2011 at 11:15pm

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Once again, seattle is giving us one of his little libertarian morality tales -- I know he gets these from somewhere on the web -- and the facts are all wrong. See here: http://en.classora.com/rankings/compare_evolution?ranking=s30614&entries=a20051207-o20039102-b20054635 Sweden had per capita income slightly lower than the US until 1975, when it passed us. (How the heck did it do that with all that socialism and confiscatory tax rates?) The spread in favor of Sweden actually rose to 25% in about 1981 (more confiscatory taxes). Then it reversed. But what you see is that the movement in Sweden's per capita income tracks that of France making it overwhelmingly likely that it was the European economy, Sweden's trade area, that caused the reversal. Never-the-less, from 1982 to 1988, Sweden recovered and surpassed us again in 1988 (the miracle of confiscatory taxes?). We passed again in 1994 under Clinton. Get that, seattle? We gained ground against Sweden when our tax rates went up, although, again, this was more a case of Europe as a whole losing ground. Then Sweden passed us again in 2006, but now we are ahead again. Whatever this shows, it is not at all the points that seattle is claiming. Sweden is tied to Europe and Europe's per capita income has been more volatile than ours. But the idea that Sweden lost ground against us because of high tax rates and nobody working is pure, unadulterated bullshit -- because Sweden has pretty much kept pace with us in the last 40 year, at times being higher, at times lower, and showing no secular trend of falling relative to the US. As usual, the factual bases for seattle's claims about one thing or another simply do not exist. I have yet to fact check him and not find that he is wrong. He is always wrong about his facts.

- roidubouloi

May 18, 2011 at 11:16pm

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seattleeng: "See the numbers that I just posted. The costs for this aren't terribly expensive. We can easily do all this." Once we throw in retirement (social) security, then what I included--health care (Medicare and Medicaid) and defense--plus debt interest and you've got close to 70% of the budget. So no, we can't "easily" do all this. The discretionary non-military portion of the budget is only about 12%. Anyway, all the other stuff I presented went unaddressed. You don't seem to dispute the arguments refuting your claims that taxes are "much higher today than they have EVER been," or your description of Social Security and/or Medicare as forced retirement savings programs--though you misdescribe them again as such in your response to Irony (repeating the claim won't make it any more true)--or that raising taxes on the wealthy once means they will go up again and again (when evidence shows they have dropped over the past 15 years). It's hard to have a discussion with people who misinterpret some data to fit their worldview, and then refuse to acknowledge other data that conflicts with their worldview. And this has been the case repeatedly: I've shown many times how seattleeng's numbers don't prove his/her claims, and presented other data that conflict with his/her assertions, which then go conveniently unaddressed. If the worldview is fixed regardless of facts and logic, then what's the use of engaging? I have to agree with Roid's last paragraph above. I have to wonder whether these responses are worth my time, except that I want to at least try to do my part to keep bad information from propagating online--an uphill battle, I know.

- dsimon

May 19, 2011 at 1:58am

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Whatever happened to a sense of community? We simply cannot maintain a viable, democratic, secure nation-state in which there are only rich and poor, and in which one class of people struggles just to survive while another lives in wealth, and most importantly, there is no nation if there is no sense of community and sharing and mutual support and respect for each others' contributions. We ALL share what we have - be that time, energy, labor, OR MONEY, because that's what people in a community do. One of the most absurd arguments of all is the concept that people with personal money are the only ones contributing to the health, wealth and creativity of a society. That's ridiculous. In fact, subsidizing oil companies instead of subsidizing ideas, the arts, the education, health and welfare of the people is going to turn this country into a disaster area. Oh wait. Much of it already is - so - because we are civilized human beings, because we are all Americans, we help each other even if we are so stupid that we build in the path of a tornado. Isn't that right Seattle & Co? Or maybe you think you guys are immune? You'll never be hurt somehow, your house flooded or burned or blown away by the winds, your city decimated by a storm; you never be downsized, broke, sick or old? What's certain, natural disasters aside, is that poor, badly educated, hungry, sick people can't do as much as healthy, strong, well-educated people with opportunities, let alone contribute their full potential to a vibrant and healthy nation. They can however rebel. They can make wars within a country or from beyond its borders. Those good libertarians in Somalia for example supplement their incomes by being pirates. Now there's an idea, right Seattle? And what about the people of Tunisia who overthrew a government because a fruit seller couldn't stand it anymore and burned himself to death? He burned himself to death and inspired a revolution. It rages on and who knows where it will lead. Haven't we seen this story before - over and over and over again - yet - somehow people don't get it; don't understand that the fabric of a society cannot be sustained if all of the threads aren't strong and tightly interconnected. So, people within a civilized nation contribute to each other because it is common sense and because everybody's happiness and security is interconnected, like plants and animals within an ecosphere. What amazes me if the fact that Libertarians and other unrealistic people assume that they can survive next to people who are hungry and not feel a thing. They assume that they are self-sufficient and immune from catastrophe and that they'll be just fine regardless of whether others are ok or not. Beyond that they assume that the world they live in just appeared and runs by magic, as though the unseen efforts of millions didn't create the matrix, don't make it run, maintain its roads, its bridges, its invisible highways in the sky. The rich assume that THEY are the only ones who have anything of value; they don't see that others think, create, love, make life better in thousands of little ways - even if they are poor. And, Libertarians and other fools apparently assume that they are safe and secure, regardless of the suffering of their neighbors. Well, is the world safe and secure, free of war and violence? And who exactly are the well-to-do to judge whether a worker in another city should have the right to live or not? Or whether the children of this country should all be educated, or not? Or what is the source of innovation and creativity? Or the real value of life and labor? Of potential? Of potential unrealized, of life cut short? We all contribute what we can. Some of us have little money but a lot of talent. So we give that. Some have (apparently) little in the way of compassion or understanding but they have scads of money. So, let them contribute a few bucks. It's simple common sense.

- Sophia

May 19, 2011 at 3:00am

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Sophia I don't think that a sense of community is going to win an election because it sounds like the less well off are saying that the well off owe them something. I advocate progressive rates for the reason that it is easier to collect revenue with progressive rates than it is with a flat rate, where the bottom dwellers can't afford to pay and the top income earners get off much easier. I believe that if you were to continually adjust rates so that the imposition of payment did the least damage, it would be higher progressive rates than we have now.

- Nusholtz

May 19, 2011 at 7:05am

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Roid writes: "Once again, seattle is giving us one of his little libertarian morality tales -- I know he gets these from somewhere on the web -- and the facts are all wrong" See Wiki article "List_of_countries_by_GDP_(PPP)_per_capita". There are 3 ways to look at per-capita. IMF, World Bank, and CIA. As noted, via IMF, SWeden is #14, with $38K in per-cap income. The US is #7, with $47.2K in income. The countries above the US are all oil-rich countries. And yes, 50 years ago, Sweden was ahead of us here. Today, we lead them by 25% according to IMF, 21% according to World Bank, and 21% according to the CIA. But I'm not clear what you dispute? You seem to show an un-attributed graph, use that to declare my numbers, flawed, and then arrive at your own conclusion related to Euro volatility And you didn't address the GDP growth (or lack thereof) of Sweden either. How about we turn it around, and you find a high-tax mecca that has shown impressive growth? You cannot.

- seattleeng

May 19, 2011 at 11:34am

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DSimon writes: "Once we throw in retirement (social) security, then what I included--health care (Medicare and Medicaid) and defense--plus debt interest and you've got close to 70% of the budget. So no, we can't "easily" do all this. The discretionary non-military portion of the budget is only about 12%." But you didn't answer the question that I posed: Of the 4 buckets, Military, Infrastructure (schools, courts, police, etc), Retirement (SS and Medicare), and Welfare...where do you want the extra taxes to go? My comments that taxes are much higher today than they have ever been is related to presidential tax returns. I noted this because there seems to be widespread belief here that people were paying huge taxes in the 30's, 40's, 50's, 60's and 70's. They were not. Obama is paying more than all of the ex-presidents (except for Reagan, Ironically).

- seattleeng

May 19, 2011 at 11:57am

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Sophia writes: "We ALL share what we have - be that time, energy, labor, OR MONEY, because that's what people in a community do." But again, you can't explain why the person earning $50K in the US shouldn't give 25% of what he has to the person in Africa? Can you answer that? Aren't we one world community? You are aware that the income/wealth gap in this country is the result of two things: 1) Education. Some are getting lots of it, and this just isn't college I'm referring to. it's skills in general. Many of our poor cannot even even understand a job application (functionally illiterate). 2) Hours worked. Some in this country like to work a lot of hours, and some don't. The top earning families in this country work many, many more hours than the bottom earners in this country. What is amazing is that when you normalize our income/wealth gap for family size, hours worked, education achieved, etc, it's amazingly small. In other words, society is functioning in a fair and rational manner. But some of the participants are not doing what you'd expect due to the largess of welfare. Even the poor have time, energy and labor as you note. Why is it they won't work? Don't say "jobs", because when asked by the Census, "lack of jobs" was not the answer that came up most often. Not even close. Final question: How much do you think a person should, on average, earn with a HS diploma? And how much should a person earn, on average, with a college degree? And a masters degree? What seems "fair" to you?

- seattleeng

May 19, 2011 at 1:08pm

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Always interesting to watch Seattle never actually addresses anyone's points, or even bothers to defend his position. It's always onto some new red herring. Or an old one. I am fascinated to learn (from his latest post) that it is the largess of the US welfare state (seriously) that is causing our current problems and the need to close the deficit. Or at least, if it's not the cause, I have no idea why its been brought up here to other than to defend the indefensibly low tax rates with anything apart from a rational argument. dsimon - Hard to have a discussion indeed, with someone who is not actually interested in a discussion or even bothering to construct an argument. Much more entertaining to talk about African farmers or the colour of cheese on the moon. Or something like "The top earning families in this country work many, many more hours than the bottom earners in this country." I wonder why that is. Clearly it is due to their inherent laziness rather than that the highest earners sit in mesh chairs all day (with perhaps a break at the gym), and the lowest ones are considerably more physically active. Bonus anecdote: I am quite fit, and I find a full day of working outdoors tiring. One other observation - we'll rarely see comments from Seattle n a post that explicitly pierces some misconception that he'll happily pedal on any other thread. Assuming that he has read more than a few of them, and not bothered to dispute them there, it brings into question the honesty of the arguments been made. For example, he was a big "Germany cut spending (which they hadn't) and gold has rained down on them (which it hasn't)". Yet when the fantasy became obviously that, little was heard from our esteemed colleague. I would guess that parroting GOP talking points is instead considerably more intellectually stimulating.

- Nari224

May 19, 2011 at 4:08pm

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Seattle, I have no problem with globalizing resources to distribute them more rationally - so that everybody has more - and in fact that is what's occurring today - sometimes in terms of trade, sometimes by direct aid, by outsourcing of previously American jobs (ahem), and by people in 3rd world countries developing on their own. So, please can we drop this straw man? It's a stupid argument. Nobody is saying that poor people in Africa shouldn't be richer vis a vis Americans and Europeans and Asians, etc - just as poor people in America should be richer vis a vis rich Americans. However, in terms of overall global development - there are complexities to this including environment considerations and that is a separate discussion. OK? Now: not working is usually related to availability of jobs and or the presence or lack of applicable skills and abilities. You continuously repeat the mantra that the poor won't work. But that, with a few exceptions, just isn't the case. It certainly isn't the case in inner cities, where people don't have a chance - unless you've really witnesses an inner city school or walked around the neighborhoods - or been poor in big city yourself - you haven't got a clue about the obstacles confronting people. But - regarding working and middle class people - what has happened and happened repeatedly to people my age is a pattern of layoffs, shrinking job market and shrinking pay, since the late 1970's. In fact, looking back at it, the Iranian Revolution and shortly thereafter, the election of Reagan and the events of that time, foreign and domestic, began a real downward spiral in the true earning ability of average American workers. This is something born out by any number of studies and charts and it should be looked at more closely, because it reflects the increasing polarization of wealth in this country and also, the relative powerlessness of workers. That is something which is frustrating and disheartening. Combine that with the loss of value in housing and stock portfolios and you have a really bad situation especially for the older workers but also - a whole generation of young people is facing a truly discouraging situation. $10/hour is considered A GOOD JOB these days and that's for highly intelligent college graduates. Is this right? I think it's a disaster. As far as who should be paid what, you should know this: I think the range in pay scales isn't rational now. Secretaries shouldn't get an infinitesimal fraction of what their bosses earn. Artists should be supported, if necessary via programs like the WPA. Doctors, lawyers, other professionals should consider the joy in their work as part of their compensation - instead, it's become all about greed. That doesn't sit well with me. I realize I'm something of a utopian here but - I've done all kinds of work - on the line in a factory, restaurant labor, secretary, real estate person, professional artist, and to do what I love I'll sacrifice almost everything in the way of money but - a living wage is a minimum. Security regarding health and housing - a minimum. A decent education: the bare minimum workers in a civilized state should expect. Laborers should get a much closer per hour rate vis a vis corporate "leaders," and workers in general should hold ownership positions in their companies. Small businesses shouldn't be crushed by mega corporations which pay zip and also have immense power to depress salaries around the world. Walmart for example impacts Chinese workers - quite negatively, as well as farmers in South America, etc, and underpays its own workers and discriminates against women plus it's put smaller markets out of business. It provides cheap goods but at a very high cost. So don't get me started. There is WAY too much centralization of wealth and power and this is ultimately counterproductive. Plus: PLEASE stop blaming the poor. You have no idea what it's like. And, not everybody who is poor is a shiftless skunk. Many poor people were relatively well off but lost their jobs. Or, they work very very hard but for very low pay - or they're sick - or old - so, your stereotyping is wrongheaded and cruel.

- Sophia

May 19, 2011 at 7:19pm

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Nari writes: "Always interesting to watch Seattle never actually addresses anyone's points" FWIW, I don't think you guys answer any questions either. You each have a different MO. Roid tries to overwhelm with volume, where the opening and closing paragraphs are filled with accusations of lying. DSimon does a bit better in answering questions, but always re-directs. And Nari, you have famous for complaining non-stop about red herrings. :) So, ask away on a pointed question and I'll answer it. And then please do the same. Nari writes: "For example, he was a big "Germany cut spending (which they hadn't) and gold has rained down on them (which it hasn't)". Yet when the fantasy became obviously that, little was heard from our esteemed colleague." Searching google news on the topic "german recovery" yields the following in the last few days: "The German economy, Europe's biggest, may grow more than 3 percent for a second year as it sustains a "robust" recovery, the International Monetary Fund said on May 17." "Germany's Economy Ministry sees growth of 2.6 percent this year." "and unemployment, at a 19-year low last month, will continue to profit from growing domestic demand, the ministry said." “The proficiency of its industry, along with a sizeable, internationally-coordinated fiscal stimulus and financial-sector stabilization measures, helped Germany establish a recovery with over 3 percent GDP growth in 2010 and, possibly, in 2011,” "Europe’s largest economy grew a record 3.6 percent last year..." "Still, while German investors’ assessment of current economic conditions rose to a record reading of 91.5 in the ZEW investor confidence index today..." I'd say Germany, with their 19-year low in underemployment, and 2 year record yearly GDP growth, is doing very well right now. Perhaps a shining star among a sea of doldrums. Do you disagree?

- seattleeng

May 19, 2011 at 8:44pm

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Sophia writes: "As far as who should be paid what, you should know this: I think the range in pay scales isn't rational now. " And again I ask: What do you think a person working full time with a high school diploma is earning in this country? And one with a college degree and a masters? You typed all those words, and didn't answer the direct question.

- seattleeng

May 19, 2011 at 8:47pm

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seattleeng, again you are nonresponsive. You don't admit the misdescription of Social Security and Medicare. You don't address the starkly evidence countering your fear that tax rates will just go up and up, especially on upper income earners. And if your claim about higher income tax rates was limited only to the to the last several individuals who happened to be president, then that's a point that's so narrow as to be functionally useless, especially when the far larger overall numbers show very different trends for the nation as a whole (which you apparently do not dispute, yet do not admit). "But you didn't answer the question that I posed: Of the 4 buckets, Military, Infrastructure (schools, courts, police, etc), Retirement (SS and Medicare), and Welfare...where do you want the extra taxes to go?" First, I don't believe you ever asked me; you asked someone else. Second, you keep asking questions that are not pertinent to the issues at hand. Fiscal responsibility is not about picking one "bucket" that you've self-defined over another; it's about getting expenses in line with revenues. (And you've repeated the same non-pertinent to Sophia that you've asked me twice before regarding how much one person "should" make as opposed to another. The question is how to fairly apportion the costs of running society, not about regulating people's relative incomes. I've made this point repeatedly, and yet you still return to it.) But I'll answer your question anyway. I'm not bound to your "buckets." Getting our fiscal house in order should involve moderate revenue increases with moderate spending cuts. Health care spending is a main cause of mid- and long-term expenses, but Medicare and Medicaid can be made more efficient without sacrificing quality, as our peer nations have amply demonstrated since they get comparable results at far less expense. Defense spending can be cut and restructured for realistic threats instead of maintaining a needless cold war posture. And when government receipts are at very low historic levels as a percentage of GDP, I don't see why it should be remotely controversial to ask people to pay the rates they did under Clinton--after all, we did achieve a rough budgetary equilibrium, even discounting the tech bubble at the end of his second term. (Politically unpopular to raise rates, yes, but uncontroversial from a fiscal policy point of view.) There are probably other adjustments to be made, but these are the main drivers of our fiscal difficulties. And I'll throw in another comment about your response to Sophia citing a Census study where "lack of jobs" didn't rank highly as to why some people aren't working. I addressed a serious potential flaw with this statistic, yet you bring it up again as if it went unquestioned. (I wrote: "to say they have the same choice to work or not is not based in reality where child care may not be available, transportation may be sparse or unavailable, and so on. Again, it seems to me that you're taking numbers that you assume prove your point when just a little reflection would show they do not." http://www.tnr.com/article/john-judis/87202/obama-economy-unemployment-budget-paul-ryan?page=1) The repeated failure to address serious flaws in analysis and the simple repetition of questions that have already been shown to be irrelevant to the debate show that these responses simply aren't worth my time anymore. It's increasingly clear that the worldview is impervious to anything that might question it.

- dsimon

May 19, 2011 at 8:48pm

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seattleeng: "DSimon does a bit better in answering questions, but always re-directs." I believe I answer just about all of your questions. When I re-direct, I point out why your question misses the point. I don't believe I get anywhere near the same in response--as I've pointed out repeatedly in pointing out explicit questions that have gone unanswered or explicit points not recognized in post after post, including my previous one.

- dsimon

May 19, 2011 at 8:51pm

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Sophia writes: "Nobody is saying that poor people in Africa shouldn't be richer vis a vis Americans and Europeans and Asians, etc " You avoided the question again. You obviously believe that someone that earns $500,000 per year should be taxed heavily to help someone earning $50,000 per year. Do you believe the $50,000 earner should be taxed heavily to help the person earning just $5000 per year? This is really the gist of Chait's article. Who decides where this line is?

- seattleeng

May 19, 2011 at 8:52pm

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Dsimon writes: "Health care spending is a main cause of mid- and long-term expenses, but Medicare and Medicaid can be made more efficient without sacrificing quality," But aren't you doing the same here (wrt ignoring past covered ground)?. We've discussed the health care at length. I believe we've covered the cost issue, and the McKinsey report, and expenditure as a function of GDP. I know it sounds good for you to repeat over and over that our health care costs are much higher than other nations, and that must be a defect of our system, but you, too, are ignoring the vast amount of information out there that contradicts this. It's like ground hog day on so many of these issues. There is a notion of "findings of fact" in legal circles that I've oft thought would be interesting for online discussions, where you break each issue down into something so simple that it's not really refutable by either side. And you build atop these "microproofs" to reach slightly larger conclusions. Instead, in this forum, each day is a new beginning. Everyone reverts to their favorite talking points at the start of each article. Yes, frustrating. On both sides. But, I do take away from this that you guys are learning facts you otherwise wouldn't have known.... :) DSimon writes: " I addressed a serious potential flaw with this statistic, yet you bring it up again as if it went unquestioned." So, a study should be discarded becasue one person thinks up a "potential" flaw in the study? Not the way it works. You find a study to refute my study, and then we can talk.

- seattleeng

May 19, 2011 at 9:07pm

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Seattle: "And Nari, you have famous for complaining non-stop about red herrings. :)" I can only call 'em as I sees 'em :). Unfortunately you appear to be unfamiliar with the concept. Either that or you just don't care that you are making logically fallacious arguments. You could always demonstrate why your points are not red herrings. To instead simply observe that I call you on them is to implicitly admit that they are. And, wouldn't you know it, but here's another example! "You obviously believe that someone that earns $500,000 per year should be taxed heavily to help someone earning $50,000 per year. Do you believe the $50,000 earner should be taxed heavily to help the person earning just $5000 per year?" Since we are talking about closing the deficit, within the constraints of both realistic & recommendable spending cuts, this is an irrelevant aside. The rich have the money required to do this, so that's where the taxes need to be raised. But to answer you, a favor you mostly decline to return: If $500k is disproportionately more than $50k (10x last I checked) then yes. At the very least, Mr/Mrs $500k (1% of the population?) can afford to pay more in real terms and as a percentage of their income and still be dramatically better off that our $50k friend. We could eviscerate the government so that $500k doesn't have to. But while there is no evidence that increasing the tax burden on 500k (that we are talking about) will disincentives them, or encourage them to leave the US (there isn't even really a migration trend from high to low tax *states* for high earners), destroying the social safety net *will* encourage them to leave as the US becomes more Latin American in nature. As for $50k paying to support $5k - already does, so this is moot. $50k doesn't derive as much benefit as $500k from the stability the government creates, but certainly pays a larger share of their available income in taxes (payroll, sales tax) than 500k does.

- Nari224

May 19, 2011 at 10:03pm

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Nari, you have missed the question and really the crux of Chait's article. The $50K earner in the US has infinitely more of everything than the $5K earner has in Africa. Why not tax the $50K earner at high rates so that the $5K earner in Africa can improve his life? Our $50K earners are overwhelmingly enjoying a cellphones and internet and air conditioning--luxuries that zillionaires didn't have 50 years ago. Can they do with just a little less (20% or so) so the guy in Africa can have clean water? So many paragraph again spent on not answering a simple question.

- seattleeng

May 19, 2011 at 11:44pm

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seattleeng: "We've discussed the health care at length. I believe we've covered the cost issue" Yes, and you didn't respond to my points. I won't go over them yet again. "So, a study should be discarded becasue one person thinks up a 'potential' flaw in the study? Not the way it works. You find a study to refute my study, and then we can talk." No, that's not the way it works either. When someone finds a logical gap in a chain of reasoning, then one admits that no valid conclusion can be drawn from it (but not that the opposite is necessarily true). One doesn't need another "study" to show that an initial one does not draw a valid conclusion; if the initial one is flawed, then one must take a position of uncertainty. But you have simply restated the conclusion with the same absolute certainty as before without either acknowledging the flaw nor fixing it. And one final point: "Why is it they won't work? Don't say 'jobs', because when asked by the Census, "lack of jobs" was not the answer that came up most often. Not even close." Here's another obvious reason why that statistic is flawed. If it were true that the vast majority of people who don't work do so regardless of the availability of jobs, why did the unemployment rate go down as far as it did during the 1990s? Why didn't more of the people who weren't working just refuse to work? Just another mystery of the universe, I suppose. Don't let that stop you from questioning your conclusion, not that I think any argument would do so anyway at this point, no matter how valid. I will observe for the last time: you didn't address any of the points that I made about the issues you failed yet again to address. It is tiresome. I believe I respond to nearly all if not all of your concerns, and you to very few of mine. I've pointed out many examples, including some several times in this thread (see my 8:48 post above), still unanswered, unadmitted, and yet unrefuted. Not worth my time, so I won't waste any more of it.

- dsimon

May 20, 2011 at 12:15am

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DSimon, wrt 8:48 Generally, if I agree with you there's not much point in commenting. But, I'll go through your points one by one 1) SS/Medi are benefit programs where I'm guaranteed to get out what I put in (unless I die). That is very unique in terms of government offerings. The intent here is that we just couch these as something that must be funded with similar amount of 'wealth transfer' that is in place today. This means taxes go up, on everyone, to make these whole. You know I'm a big advocating on making sure everyone is bought in. 2) CBO only has data since 1979 on effective tax rates. And for almost everyone, they are about 3% lower than in 1979. The big difference is top 0.5%, where they are 5-10% lower. No question we should restore all these when the economy can tolerate it. I cited the presidential data becuase it shows that wealthy people in the public spotlight DID NOT pay extraordinarily high taxes back then, contrary to popular belief. The belief that the top 5% (minus the top 1%) were paying more than 25 or 26% ever is just not correct. 3) The "bucket" hypothetical let us separate how much someone really wants to spend on infra, and how much one really wants to spend on welfare. That is why some others reject the bucket breakdown. Because it forces you to admit that redistribution is your goal with higher taxes. Not schools. Not police. Not the courts. But ironically, when the left talks about higher taxes, they always say they want them for schools and bridges. Yes, that. But much more. 4) Agree that getting our house in order requires increases in tax and cuts in spending. Medicare and medicaid CANNOT be made more efficient without cutting quality. The CBO just wrote: "For these reasons, the financial projections shown in this report for Medicare do not represent a reasonable expectation for actual program operations in either the short range (as a result of the unsustainable reductions in physician payment rates) or the long range (because of the strong likelihood that the statutory reductions in price updates for most categories of Medicare provider services will not be viable)." In other words, the across the board doc cuts mandated by OBamacare is disastrous for the providers, and thus the recipients. The CBO just stated Medicare is in serious, serious trouble and that the assumption they were required to make are bogus. So, looking at the buckets again...More taxes for SS/Medi, more taxes for infra, cut defense. And that's it? That's all you want? A 4% increase on effective rates for all (little less for low earners, little more for high earners) gives us higher taxes than we've seen in 50 years, and will solve everything. And yes, the top 0.5% can go up 10%. But that is all you want???? That's pretty much what I want too. Go figure. 5) You write: " When someone finds a logical gap in a chain of reasoning" Did you read the report? Did you read their methodology? Did you look at the raw data? If you did that, then I'll give your answer much more weight. But if you are just throwing darts in the dark, then no, your "concern" is likely borne from misunderstanding because you didn't take the time to read. If there is one thing the government is pretty good at, is crunching numbers. Please let me know if you exhaustively researched their methodology You write: " Why didn't more of the people who weren't working just refuse to work?" Because they have 99 week unemployment insurance. Duh. As the 99 week mark hits, surprisingly, many are finding work again. Don't you think it's strange that the time required to find a job correlates strongly with the length of unemployment insurance? How come most find work the same month their last check arrives? Coincidence? Or something else? So, with this, I think I've responded to your 8:48 post. And which, BTW, you see there is a fair bit of agreement (I think). And if I don't respond to somehting, it's usually because 1) it's not disagreeable to me, or 2) it's not germane to the larger discussion.

- seattleeng

May 20, 2011 at 11:31am

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Sophia, I asked: "And again I ask: What do you think a person working full time with a high school diploma is earning in this country? And one with a college degree and a masters?" This is a very important question and I think we'd both learn a lot about each others thinking based on your answer. There is an interesting study where a bunch of people were asked what should the salary be for an elevator operator and for an engineer. They asked academics, whites, blacks, immigrants, executives...a wide cross section of our population. And surprisingly, the actual data had LESS of a gap than people expected. In other words, people expected the engineer to make more than he actually did (or the elevator operator to make less). In other words, it was an egalitarians dream. I bring this up because this is an area that has been deeply studied, and I think you'd be very surprised at how fair the data is. And it's the first step to realizing that for those that work 40 hours per week, society is extremely fair. But first you need to guess (or research it, I don't care).

- seattleeng

May 20, 2011 at 11:36am

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You play your usual games Seattle to tell false tales. Before the 70's, Sweden was behind us. Until just before the 2008 crash, it was ahead. Thus, the way you count, one would have to say that for 40 years per capita GDP in Sweden grew faster than the US despite what I assume were much higher taxes. The perfectly apparent high correlation of Swedish and Frencf GDP shows Sweden's economic dependence on Europe. As for high growth, in the postwar US, faster growth has been associated with higher marginal rates and lower growth with lower marginal rates. The perfect natural experiment for your economic theories that have always been a failure. Higher growth is associated with higher marginal rates because both income inequality and government spending are generators of growth, the exact opposite of your libertarian fantasy economics. Not that you give a damn about reality.

- roidubouloi

May 20, 2011 at 1:20pm

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Is seattleeng an engineer or engineered? Like the GOP equivalent of The Postmodern Essay Generator? Looks about ready to me if so.

- SarabandeG

May 20, 2011 at 3:01pm

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Also, France didn't invent Facebook? WTF cares? It also didn't wipe out the Third Reich, The U.S. and Soviet governments did. (I totes just defriended Hitler, war's over bitches!)

- SarabandeG

May 20, 2011 at 3:05pm

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Oops. Meant to say income equality and government spending both promote growth. Welcome, welcome, sarabande. A fresh, new voice we need badly.

- roidubouloi

May 20, 2011 at 4:10pm

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Never have I seen such a (well-deserved) piling on in all my years of being on NRO. Well done, ladies and gentlemen... and don't stop.

- zardoz67

May 20, 2011 at 4:19pm

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seattleeng, I respond only to these points because it won't take up much time. "SS/Medi are benefit programs where I'm guaranteed to get out what I put in (unless I die)." Absolutely wrong. They are pay-as-you-go programs. Present taxes are used to pay present beneficiaries. There is no guarantee that people paying into the system now will get what they put in; they rely on payroll taxes (plus some premium contribution in the case of Medicare) to fund current expenditures. If there are too few workers, or if payroll taxes aren't high enough, then benefits to current retirees will be cut accordingly; that's why SS trustees say that benefits will go down to 75% of current levels when the surplus created by the baby boomers is exhausted. "You write: 'Why didn't more of the people who weren't working just refuse to work?' "Because they have 99 week unemployment insurance." That doesn't answer the objection. You said absence of jobs wasn't the reason people didn't work. You have no evidence that those who took jobs in the 90s had run out of their unemployment benefits. You just assume it's the case because it fits your predetermined conclusion. "it forces you to admit that redistribution is your goal with higher taxes. Not schools. Not police. Not the courts." All of these are redistributive as well. Government schools provide education for those who couldn't pay for them on their own, so the wealthier fund the service for the less wealthy. Same with police protection. And the judicial system. And defense, for that matter.

- dsimon

May 21, 2011 at 1:49am

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DSimon writes: " There is no guarantee that people paying into the system now will get what they put in; they rely on payroll taxes (plus some premium contribution in the case of Medicare) to fund current expenditures." Yes, OK, correct. But with medicare delivering $3 payout of benefits for every $1 put in, it has has a long way to go until it's slips into a true tax (eg. I see less than $1 of benefit). And SS is on the edge right now. So, yes, in my lifetime, it'll probably flip to where I'm getting much less than $1 of benefit for each dollar put in. But for the last 50+ years, both have delivered returns in excess of what has been put it. And thus can be tolerated. But as soon as SS becomes means tested, it will become a massively redistributive tax, rewarding those who have saved nothing in their lifetime. Consider a guy making a modest $100K/year, saving 10% for 20 years. That's $2M he will amass for retirement. Does he deserve SS? Probably not according to some, as he's fairly well off for retirement. This would be very bad. DSimon writes: " You said absence of jobs wasn't the reason people didn't work. You have no evidence that those who took jobs in the 90s had run out of their unemployment benefits." No, the Census said the reasons people on welfare don't work is the following: Ill or disabled: 32.8% Home or family Reasons: 31.1% School or other: 21% Retired 9.2% Lack of jobs: 6.2% Remember, our society has 5.8M long-term unemployed (27 weeks or longer). Under Bush/Clinton, there were probably 2.4M long-term unemployed. We have some 14.3% of families in poverty currently, which is around 17M families. Those in poverty, based on those numbers alone, overwhelmingly aren't looking for work. Poverty is not a jobs issue. If it was, during the boom of the 90's we'd have seen poverty drop to very low levels. It did not. In the late 90's it hit 12%. Again, today it is 14.3%. DSimon writes: "All of these are redistributive as well. Government schools provide education for those who couldn't pay for them on their own, so the wealthier fund the service for the less wealthy." Yes, some redistribution will always be present. That cannot be avoided. SS + Medicare bucket are roughly 20% redistributive. The infra bucket is probably similar. The military bucket isn't. The welfare bucket is. Keeping the SS and infrastructure buckets at 20-25% redistributive is reasonable. The welfare bucket needs to shrink. Severely.

- seattleeng

May 21, 2011 at 12:37pm

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Roid writes: " Before the 70's, Sweden was behind us. Until just before the 2008 crash, it was ahead. " See the link below. Their summary of the situation is "During the 1970s Sweden was the fourth richest OECD country, measured this way [GDP per capita for OECD countries]. During the last decades however Sweden's position has varied both down to 14th place and up again." Currently they show Sweden for 2009 at 11th. The point remains valid. Sweden used to be a productivity power house. They are not anymore. http://www.ekonomifakta.se/en/Facts-and-figures/Economy/Economic-growth/GDP-per-capita-/ Don't eat the link. Don't eat the linkDon't eat the linkDon't eat the linkDon't eat the linkDon't eat the linkDon't eat the linkDon't eat the linkDon't eat the linkDon't eat the linkDon't eat the linkDon't eat the linkDon't eat the linkDon't eat the linkDon't eat the linkDon't eat the linkDon't eat the linkDon't eat the linkDon't eat the linkDon't eat the linkDon't eat the link

- seattleeng

May 21, 2011 at 12:54pm

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seattleeng: I wrote "You have no evidence that those who took jobs in the 90s had run out of their unemployment benefits." Nothing you posted above refutes this claim. You just reassert your assumptions, assert some "poverty" numbers which are not unemployment numbers (and which could use a cite to back them up), and then go back to your own prior numbers--none of which explain why unemployment got so much lower in the 90s. You say "Poverty is not a jobs issue. If it was, during the boom of the 90's we'd have seen poverty drop to very low levels. It did not." But if the jobs produced are low-paying jobs, then taking those jobs will not necessarily get one out of poverty. And yet people did take jobs in the 1990s, which may indicate that people are willing to take jobs even when they're available, even low-paying ones. Really, this stuff should not be so hard to explain if you're willing to put in a little effort. And you continue to look at Medicare and Soicial Security in terms of what "you" put in and what "you" will receive, even though you admit that they are pay-as-you-go programs with no necessary connection between what you put in and what you will get. They are already "true" taxes which go to those who qualify for benefits. Period. Your expectation of qualifying for benefits does not make the present tax any more or less "true." Really, I give up trying to explain this again. "The military bucket isn't [redistributive]." Sure it's redistributive. The wealthy pay more for defense than the poor, yet everyone is equally defended, hence it's redistributive. And you provide no support for your claims that Medicare and SS are "20% redistributive," nor do you even define what it means to be X% redistributive. But throwing around numbers (without citation, again) that don't mean what they seem to mean--if they mean anything at all--isn't anything new, as I've noted (repeatedly) above.

- dsimon

May 21, 2011 at 7:25pm

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No, seattle, the point is not valid, because it is one of those point to point comparisons you so love to make that ignore everything that happens in between. It is just as true that "in the 1970s Sweden had a lower per capita GDP than the US but, by 2008, it had moved ahead of the US." That's because in the first half of the 1970s Sweden was still behind the US. The, despite socialism and taxation, it passed us. So, if you are making your type of false claim, you can make it either way whether "the 1970s" refers to before 1975 or after. What the whole time series shows is that Sweden has throughout the period been ahead of the US at times and behind at times, at ahead as recently as 2008. Given the steep drop from 2008 to 2009, it is clear to those who understand this type of data that Sweden did not suffer a sharp drop in productivity in one year. A change like that can only come from a drop in demand, most likely export demand, that can have a big effect in a small economy. The US is much less volatile throughout the period because it is a much larger economy. So, if you sensibly take the US as a trending baseline, Sweden goes up and down around our trend. There are a lot of elements to this, but the history cannot possibly support your claim that Sweden has fallen behind us due to high taxation. Only if you included "falling behind" to mean both falling behind and surging ahead.

- roidubouloi

May 22, 2011 at 8:56am

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Roid, your data source is the World Bank "Atlas Method", my source is PPP. If you believe the PPP method, then the statement from the swedish economists I posted (and my original state) is true. If you believe the Atlas method, it's not. it's as simple as that. The differences are detailed at the link below. There's not really much we can debate here. http://siteresources.worldbank.org/DATASTATISTICS/Resources/GNIPC.pdf

- seattleeng

May 23, 2011 at 1:43am

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DSimon writes: "You have no evidence that those who took jobs in the 90s had run out of their unemployment benefits." You are missing the point. You wanted to know why people didn't refuse to work in the 90's when unemployment was so low. THEY DID REFUSE TO WORK (valid or not). We know this because poverty remained sky high. Round numbers: When Clinton was presiding over boom times, we had around 13% poverty, roughly 15M families. Today we have 17M in poverty, roughly 15% poverty. Good time or bad times, we have almost the same number of folks in poverty (15 versus 17M). That reinforces the statement that this isn't a jobs issue. DSimon writes: " They are already "true" taxes which go to those who qualify for benefits." Except, overwhelming, the population is getting more out of both S+Medi than they put in. And that has historically been true, too. Unless you die early, everyone has made out like bandits from these programs. That isn't like the other government programs where the rich get much less than $1 in benefits for $1 in taxes. Today, the rich get more than $1 in benefits for both SS and Medi. DSimon writes: " The wealthy pay more for defense than the poor, yet everyone is equally defended, hence it's redistributive." Alas, a wealthy person has more to lose from an invasion or attack. So no, this is not at all redistributive. Any more than police or fire is redistributive. Now, if it was decided that I had to buy my own military or fire protection and still pay taxes, then those taxes would become 100% re distributive. Much like means testing SS.

- seattleeng

May 23, 2011 at 2:00am

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seattleeng: "THEY DID REFUSE TO WORK (valid or not). We know this because poverty remained sky high." Come on, seattleeng; did you even look at what I wrote? You assume that having a job gets one out of poverty. A low-paying job does not. So your evidence is lacking, replaced (again) by your assumptions, which you don't bother to check. Again, you draw your predetermined conclusion you desire from data that do not support such an inference. "the population is getting more out of both S+Medi than they put in. And that has historically been true, too." That doesn't make it any less a "true tax," whatever that means (and you never define it, so we don't know). It is a transfer from present workers to present retirees, done through taxation. The fact that present workers may someday benefit (there is no guarantee) doesn't make the tax any less of a tax. But maybe someday you'll actually define your terms. "Alas, a wealthy person has more to lose from an invasion or attack. So no, this is not at all redistributive." I don't think our armed forces are going to spend variable amounts protecting people based on their property values. Plus there is the obvious point that wealthier people are paying a lot more for being protected; the poor pay little or nothing. So it is at least partially redistributive. Reply if you want. I see it's useless to answer further on this thread, so I will not do so.

- dsimon

May 23, 2011 at 8:41pm

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seattleeng: "THEY DID REFUSE TO WORK (valid or not). We know this because poverty remained sky high." Two last points. If they refused to work in the 1990s, how did unemployment get so low? How can so many people refusing to work result in a substantial drop in unemployment? And would you please provide cites for your data? (Again, how many times does that have to be asked?)

- dsimon

May 23, 2011 at 9:42pm

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