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Friday, September 09, 2011

He hates these cans

On the President's speech on "jobs" (the main focus of which, to me, seemed to be keeping his and those of his cronies) --you can find the text of the speech in its entirety here.

It is good to remember in reading the speech that somewhere between 10% and 20% of working age citizens are out of work. The level of unemployment rises with the level the of lack of education; i.e. a higher percentage of people without high school diplomas are out of work than those with PhD's in nuclear physics or chemistry. On the other hand, 80 to 90% of Americans are employed.

The president seeks to address the needs of the 10-20% because it's some sign that some employment "compact" between workers and their employers has "eroded."

Well, erosion is caused by something - and in this case, we have laid off home building workers because the market for new housing tanked. Why did that market tank? Because the greedy home builders decided they would make more money without workers? Because of government policies that encouraged lending money to any Tom, Susie and Harry who walked into a loan office? Who caused the housing market to tank? Home construction workers are just one example  - you can fill in other jobs impacted by government policies.

The President's favorite rhetorical device is the "straw man" argument. For example, "I'm also well aware that there are many Republicans who don't believe we should raise taxes on those who are most fortunate and can best afford it. But here is what every American knows. While most people in this country struggle to make ends meet, a few of the most affluent citizens and corporations enjoy tax breaks and loopholes that nobody else gets. Right now, Warren Buffet pays a lower tax rate than his secretary - an outrage he has asked us to fix. We need a tax code where everyone gets a fair shake, and everybody pays their fair share." What this argument ignores is the almost 50% of the population who pay no income tax, due to "loopholes" passed for their benefit. Indeed, some Americans not only pay no income tax, they receive "credit" (such as the "earned income credit") that may cause them to receive a "refund" of tax they didn't pay. Is this a great country or what? And the basis for a "fair" tax system is that "you can afford it?" What's the old communist saw? "From each according to his means . . .?"

More straw men: "Now, I realize that some of you have a different theory on how to grow the economy. Some of you sincerely believe that the only solution to our economic challenges is to simply cut most government spending and eliminate most government regulations.***But what we can't do — what I won't do — is let this economic crisis be used as an excuse to wipe out the basic protections that Americans have counted on for decades. I reject the idea that we need to ask people to choose between their jobs and their safety. I reject the argument that says for the economy to grow, we have to roll back protections that ban hidden fees by credit card companies, or rules that keep our kids from being exposed to mercury, or laws that prevent the health insurance industry from shortchanging patients. I reject the idea that we have to strip away collective bargaining rights to compete in a global economy.***In fact, this larger notion that the only thing we can do to restore prosperity is just dismantle government, refund everyone's money, let everyone write their own rules, and tell everyone they're on their own — that's not who we are. That's not the story of America." Now, honestly, have you heard any rational opponent of the President demanding a choice between "jobs and safety" or rolling back "rules that keep our kids from being exposed to mercury?" Or any of the other straw men he tossed out there?

 My favorite non sequitur in the speech was this gem: "Building a world-class transportation system is part of what made us an economic superpower. And now we're going to sit back and watch China build newer airports and faster railroads? At a time when millions of unemployed construction workers could build them right here in America?" Really? Does he mean we are going to build China's "newer airports and faster railroads" right here in America? Or does he mean somehow that China's airport and railroad construction has anything at all to do with whether or not we choose to build our own newer airports and etc.?

Some where along the way, I got reminded of this scene from "The Jerk"

Navin has an excuse for his wrongly drawn conclusions, though.


  1. Eagle1,

    30% of the population that paid no income taxes are poor, out of work, or elderly. The other 70% paid payroll and other federal taxes.

    In any case, the people we're talking about are primarily the poor, unemployed, elderly or low-income working households.

    The bottom 50% of this country controls only 2.5% of the U.S. wealth. What "fair share" can the people actually pay?

    Of course John Stuart says it better,

  2. My comments were directed to income tax, not "payroll" taxes, which are also not paid by "out of work" and the retired "elderly." As for what they should pay, it cannot be based on what % of the wealth they "control" but they ought to pay something to have some "skin in the game." Otherwise they are "free riders." My suggestion would be a consumption tax like the Fair Tax. Or, on a layaway plan, $2.50 a week at minimum.

  3. Income and payroll taxes all go in the same pot. Payroll tax is just another form of income tax. It is based on income.

    We have to look holistically at federal taxes paid by individuals, including all forms of taxation, not just income tax.

    Some may "free ride" on one form of taxes only to be disproportionately burdened by another. Buffett may be in the highest income tax bracket, but he still pays most of his federal taxes at the 15% capital gains rate. That doesn't seem fair to me.

    I'll have to look into the details of the "Fair Tax", but what we can't realistically do is shift a larger tax burden on poor and lower-income individuals. That's the implication Republicans are making when they say "50% of Americans aren't paying income tax". The poor and low-income folks just really can't afford to pay it. Warren Buffett can. Frankly, I can too, and my income has several fewer zeros at the end than his.

    Just MHO.

  4. davod2:45 PM

    "Income and payroll taxes all go in the same pot. Payroll tax is just another form of income tax. It is based on income."

    Payroll "tax" is the contribution to Medicare and Social Security. Which is why it should not be taken into consideration in any discussion relating to income tax.

  5. From IRS "Fairness Division" Washington, D.C.
    o: B. Smitty
    Subj: Income Tax Fairness

    1. It has come to our attention that you are interested in enabling some of the poor and low-income people in this country to not be disproportionately burdened by taxes, citing "payroll tax" as an indicator of unfairness.

    2. We accept your kind offer to unburden some of those afflicted by such unfair taxes.

    3. We have a proposal as how to make it more fair.

    4. First, we will take your gross income and deduct from it an amount which will make your gross income equal to the national median of such incomes. According to our calculations, this average median income for a family is $56,194. This is your new "fair" income. All amounts over that amount earned by you and your wife will now be distributed to one or more families earning under $56,194 until their income reaches $56,194.

    5. Since, under this plan, all family incomes will become equal, all tax burdens will become equal and therefore, perfectly "fair."

    6. Further, if you own a home that is paid for or has unused rooms, you will be charged a tax equivalent to the average "rent" paid by non-homeowners for either the entire house or on any empty rooms that could be rented to boarders. This will ensure your expenses are "fair."

    7. Since the poor and low-income may not have a car for basic transportation, any cars you have that exceed 1 per family will be taken from you and distributed to any formerly poor and low-income who lack cars. You will be taxed to pay for 1/2 of the gas and upkeep of such car or cars so that the formerly poor are not penalized.

    8. If you have a vacation home or time share, you will be allowed to use it 1 week per year. The other 51 weeks will be assigned to the formerly poor and low-income. Any golf or other club memberships will be split along the same lines. The formerly poor couldn't save enough on their former low incomes to afford such luxuries and that is clearly unfair.

    9. You seem to have college degree. Because this is prima facie unfair, you will pay an "education tax" that will help the less fortunate among us afford college. If you have children, statistics indicate they have an unfair advantage of having a college educated parent or parents. We will remove them from your home and distribute them into other less privileged families. You will be receiving new children born under less fair circumstances soon as replacements.

    10. Statistics also show the children of intact families have income and other advantages. We will be by with your divorce papers when we pick up your children.

    As we think of other unfair aspects of your life, we'll be in touch.

    Your Fair Friends at the IRS.

  6. Oh, and Jon Stewart? His $14+ million income will spread a lot of fairness under the system proposed above!

  7. Eagle1,

    I'm fine with discussing a different tax structure. We have to close the gaps somewhere.

    I just don't see how you're going to squeeze more blood from the un/under-employed or low-wage stone.

  8. B: Thanks for playing along.

    No easy answers are there?

    Take a look at the Fair Tax - it has a "prebate" feature that takes care of the poor, eliminates most of the IRS and is consumption based.

    Of all the systems, it seems to be the least bad of a lot of bad choices.

    Fair Tax website here.

    Best regards.

  9. AND NOW: the O-man is out on the road talking about passing "the bill" to all those poor unknowing pontential voters.

    Here is what I ask: "Where's the Bill?"

    Is the document he so ardently speaks about actually written, has it been submitted to the Congress? And finally being a DC native of the Last Colony, I have always been a close observer of congressional critters and the transients in the White House.

    Why the hell isn't the President, head of the Executive Branch NOT back in DC working with the Legislative Branch to get the vapor-bill processed and passed?

    Yes indeed he reverts to campaign mode.

  10. Eagle1,

    Looked over the FairTax site and the Wikipedia entries on it. My biggest worry is that it is a huge unknown. Would such a large sales tax spawn a huge black market for goods to circumvent it? How long would it take to find the "right" balance? How many new loopholes will there be?

    Also, "Better the devil you know than the one you don't", as they say.

    The current tax code may be a mess, but at least its a mess we (more or less) understand. Tweaking it seems far less risky to me.

    Maybe a FairTax could be phased in over a decade or so, with increasing sales taxes and decreasing income taxes every year. That way we could see the effects over time and adjust gradually.

  11. Well, it would have to be some huge black market to replace gas stations, Wal-Marts , grocery stores, car dealers, etc.

    I guess I have more trouble than you living with a system as inefficient and "unfair" as the one we currently have.

    Not to mention the corruption caused by the power to tax.

  12. A sales tax of 20-30% would provide a much stronger incentive to evade it. Taxing via the multiple methods we have today may be less efficient, but it also adds some redundancy against fluctuations in taxpayer spending and earning.

    Also, by encouraging savings, won't it have a negative effect on job creation? The lack of consumption is already a large drag on the labor market. I'm not saying all saving is bad, but too much certainly has negative effects.

    And in any case, this won't remove the "power to tax" it just changes the vehicle by which taxes are collected. Congress will still have to make exceptions and adjust this system over time, creating new loopholes and new complexity.

  13. Well, I guess there are no incentives or attempts to avoid taxes under the current system - oh, wait.

    Eliminating the Tax Code may be the single biggest benefit.

    Savings are bad? For years we've been told Americans don't save enough. And, if they get to keep all their pay instead of what is left over after taxes, they can both save and spend.