Brent Nyitray
Fairlington Blade
Let the mutherfuker burn!
jnc4p
Kevin S. Willis
Michigoose
lmsinca
markinaustin
Arcanaut
novahockey
quarterback
ScottC
yellojktNancy: Well, if that’s your attitude, I think you should give me half the money and let me eat whatever I want and you can do what you want with your half. I think that’s the fair thing.
David: The fair thing? The fair thing? I can’t believe it. That’s it! I have been too controlled! What do you mean? You took our nest egg and you broke all over the Desert Inn!
We hear a lot from President Obama, and the left in general, about the rich “paying their fair share” in taxes, the implication being, of course, that they don’t pay their “fair share”. But almost inevitably the charge comes without any serious consideration or offer of an actual objective measure of what fairness means. It is used simply as a populist cudgel to demonize the so-called rich. I think a true measure of “fairness” needs to be established in order to properly analyze whether this claim, that the “rich” aren’t paying their “fair share”, has any validity whatsoever. So what might such an objective measure be?
There has been one such measure offered recently, which is that people who earn an income from capital gains end up paying a lower rate of tax on their income than people who earn income from a salary. This, it is said (and seems at first glance) is objectively unfair. This particular measure is definitely worthy of consideration, and perhaps can be the subject of a future post. But for now I’d like to leave it aside, not only because of the complexity involved (one cannot talk about capital gains tax without also considering corporate taxation, nor the net effect of the progressivity and myriad of deductions allowed in the income tax), but also and primarily because I don’t think this is what people really mean when they speak of the rich not paying their “fair share”. If it were, then the claim would be used to bolster the notion only that capital gains tax should have the same structure and rates as the income tax, and it would be used against people making a certain kind of income, rather than being used to bolster the notion that rates should higher, and used against people making a certain amount of income.
And so, I would like to know by what objective standard can it be said that “the rich”, which I will define as those earning more than $250k per year, do not pay their fair share in taxes? When answering, please try to connect your answer to a) the share of taxes that this demographic actually does pay, and b) the services towards which taxes actually go.
Filed under: Uncategorized |
All Things in Moderation 
I spent a little time trying to find the survey that was published some time ago asking people what rates [they think] "the rich" pay and how much they should pay, but I came up empty. I posted a link at some point on PL in the past year. What was interesting was that people tend to think the rich pay far less than they actually do, and when asked how much the rich "should" pay tend to answer something lower than what they actually do. I don't subscribe to a theory that says justice is a matter of voting, but it is an interesting piece of attitudinal data that most surveys do not gather.
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A couple of quick notes. Personally, I would not resort to a "fairness" argument except as a political talking point. I would analyze tax policy in terms of revenue needed for budgeted expenses and where to get that revenue with the least distortion of the economy and the least competitive disadvantage, given the budget requirement.I have no problem with low taxes or no taxes on poor people and even the lower middle class; their consumption is mainly food clothing and shelter and thus [critically] mainly consumption of American made goods, services, and real estate. Best for Main Street to keep the money in their pockets until it is spent at the PigglyWiggly, HEB, or Safeway. The original income tax was only on the rich, btw. One observation: our Constitution prescribes certain budget priorities like defense, and post roads, and inland waterways. The creation of a common market is at the core of the historical Constitution. That makes a bias toward federal spending on BIG STUFF, the stuff we cannot do individually, or locally, or at the state level and maintain our internal free trade zone with its optimal internal economic stimulus. Thus there is a budgetary bias, one that I approve because I believe in the Constitutional priority of continental free trade, in favor of federal expenditures flowing to the prosperous. That is, in favor of highway contractors, defense contractors, port contractors, and the like.That is also why I am befuddled by the failure to see low interest rates and lagging private construction as an opportunity to do a lot of Constitutionally favored infrastructure fix-up, right now.I would consider that spending as uphill, as long term support of the private business sector, which incidentally would be good for all of us.I used this example because I think there is a tendency by some to view such spending as "downhill" makework for the lower middle class. Obviously, I disagree.I exclude SS and Medicare from this discussion as they are funded by a flat tax.Medicaid is downhill spending. Foodstamps and Section 8 housing and Head Start are downhill spending. The V.A. is the unintended consequence of defense spending and the Homeland Security is defense spending. Thus uphill, regardless of who you see as the beneficiaries. Ag spending is largely uphill, but the school lunch program is downhill.On balance, I think our spending flows uphill and that is the permanent intentional bias.
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Fairness? If I pay 35% on my 50k, then I think that those making more than $250K should pay a higher percentage.It is not fair for me to pay out a higher ratio of my income than that one making 5 times more. That means that I have far less take-home.For example, my $50k at 30% leaves me with 35K to make rent, food, clothing, transportation, utility payments.That guy making $250k at 35% has 162,500 of take home to pay rent, food, clothing, transportation, utility payments.I don't grudge that he makes $250k, or that he has more take-home than I even with a higher tax percentage. He should.But we have to get into capital gains. Those make $250k may have a business from which they get their income. Generally, though, that top 400 that everyone talks about don't make most of their money through one business. They make it through investments. And they pay far less ratio on their income than I do, and they already make much, much, much more.That is not fair.
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I whinced when I read Obama's comment about the rich paying their "fair share" for the reasons you identify above and because I don't think we need to get into a moral argument in order to make a compelling case for raising taxes on the $250,000 and above crowd. I will have to do some digging to answer your questions (a) and (b) more thoroughly, but (a) I think we are all aware that a minority of people at the top income level pay the most in taxes. Here's one source of numbers:http://www.taxfoundation.org/news/show/250.htmlAs for (b), that is obviously a more difficult question to answer and to a large extent is akin to the question you ask about captial gains rates and how that relates to corporate rates and deductions etc. Suffice to say that a CEO relies on a huge swath of services utilized by his/her company to help make the company profitable which presumably impacts his/her income. As a result, the argument is that they should pay more than say the guy or girl working in the plant the CEO runs or in the IT department that runs the network the CEO relies on. That seems to make sense, but it doesn't really help us determine whether the porridge is too hot, too cold or just right.
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I agree that "fair share" and "class warfare" are political terms that probably should, but won't be left out of the debate. Essentially the question remains, do we have enough revenue to support our expenses? Obviously we don't and according to the polls most people seem to believe we should both cut spending and increase taxes at the top slightly. That seems like a reasonable compromise to me. I also believe though that the middle, working class and poor have suffered over the last decade or more and to continue to call for more sacrifice from them by cutting the safety net, UI, education etc. etc. is an unreasonable expectation. Obama is correct, even though he may have worded it incorrectly or politically if you will, you can't just keep pressure on the 90% of Americans to do their part and not expect the other 10% to step up to the plate. I realize that's a non-starter for most Republicans but I think that's the space most Americans occupy.
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OT for Scott and anyone else interested in the UBS trading scandal. Several points are raised in this piece. 2. Why didn't the alarm bells go off sooner?According to a person familiar with the matter, the unauthorized positions were initially hidden through the creation of fictitious trades with other parts of UBS. These trades, known as "internal futures", do not require confirmation because they are conducted inside the bank.UBS controllers questioned this activity as early as July, and did not receive a satisfactory explanation. This looks like a big missed opportunity to stop the scandal at a much earlier stage.
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"The original income tax was only on the rich, btw."I did not know that. Something to mull over for a while.
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Taroya:The top rate was also only 7%.
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lms:re UBS, I had written a new piece on it about the new info I found out. Might as well post it here now:First, it turns out that, despite the name, the particular exchange traded futures (ETFs) he was pretending to trade to cover his positions are not, in fact, traded on exchanges. They are over-the-counter contracts negotiated individually between counterparties. Don't ask me why they are still called ETFs. It makes no sense. But that explains how the fake positions were not caught by margin calls and position verification at the exchange…there weren't any. Still, such contracts need to be confirmed between counterparties, so presumably when the back office went to confirm the contracts with the counterparty, which should be done the day of the trade, they would find out they weren't real, right? This is where it gets interesting, but first, some background. At large institutions like UBS, it is fairly typical for different groups with different expertise and mandates to execute internal trades with each other, passing risk to groups that are in charge of managing those risks. So one group may execute a trade with an outside counterparty, and then execute an internal trade, hedging themselves by transferring the risk to a group with a mandate to either hold that risk or manage it. Now, UBS is already going through a bit of turmoil, and is planning on cutting a large number of staff. It has already started to happen, and as a result of this culling, several groups within the UBS trading universe have become defunct and have been shut down. But, apparently, the defunct groups have not been removed as entities within the UBS trading system. (You can probably see where this is going.) The speculation (and it is just speculation at this point) is that the fake trades this guy entered into the system were done ostensibly with internal groups at UBS, but groups that no longer actually existed. So to his managers, it appeared that he was hedged and within his limits. And under normal circumstances, the other group would notice the risk showing up in their reports, and would question where the risk was coming from. But since the groups no long actually exist, there was no one there to question what the risk was. In other words, he was able to use a breakdown in systems control (the failure to remove defunct groups from the trading system) to hide risk in a place no one would find it.This scenario makes a lot more sense, and explains how he was able to escape detection without anyone else's help.
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ScottInteresting, so he could technically have been acting alone, correct?
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My personal view of this from the other day still holds. A large financial company without appropriate internal controls gets what it deserves.
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Couldn't agree more MsJS.
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lms:Correct. He foudn a hole in their controls, it seems.
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ashot: "but (a) I think we are all aware that a minority of people at the top income level pay the most in taxes."I think we're probably all aware, but I brought that up in a discussion elsewhere not that long ago, with backing data, and got accused of shilling and propagating false data. Because a lot of people have a lot of emotion invested in the debate, they don't want to think a single "right wing talking point" has any truth to it . . . and my argument, at that time, was that part of the difficulty in making the "tax the rich" argument (which I quasi-support) is that when you start out without laying the facts on the table ("look, we know the rich pay way more in taxes, and shoulder the majority of the real tax burden in the country, but . . . ") then it seems either that (a) the person making the increase-taxes argument simply doesn't know what they are talking about or that (b) they know exactly what they are talking about, but they are trying to ignore information they think hurts their argument, making their pro-tax argument opaque and disingenuous. And, I reiterate, for anybody who doesn't know, I support a more progressive tax that leads to a top marginal rate of 50%, increasing in increments of 1%, for folks making $10,000,000 a year. And I would support that if the folks make $300k were paying a point or two less in taxes, but folks making $1m were paying a point or two more, then folks making $3m were paying more still . . . etc. But, I've been over that ground before.ScottC: "The top rate was also only 7%"I don't have time to research it, but it was (as I recall) a very short leap from 7% to literally 90%. If you want to know why conservatives resist any tax increase, it's because, historically, that means the next one will be sooner and larger.
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lmsinca: "I agree that "fair share" and "class warfare" are political terms that probably should, but won't be left out of the debate."'I'm very much with lm on this. I think the rich already pay more than their "fair share", in the abstract. It's just a question of what makes the best policy for everybody (rich included). That being said, Troll McWingnut has a point about the government, by any standard, being a poor steward of that money. Personally, I'd rather see the money that went to bankroll the manufacture of expensive electric sports cars in Finland go to add an exit to I-40 in North Carolina or fix a bridge in Indiana or refurbish an inner city park in Oregon. I don't have a problem with wealthy people paying more (and in two places: a more progressive income tax and raising the cap $100k (at a lower percentage) on SS while keeping the payout fixed). But if that money's going to go to unsustainable solar panel companies or car manufacturers in Finland or into the personal accounts of middle eastern dictators . . . then I'm less supportive. The fairness argument doesn't work for me, in either direction (we shouldn't forget, folks on the right often argue that it's unfair for the non-producers to leech off the producers, or that the top 5% pay 50% of all taxes, but I don't think fairness is either the point (unless you're a disaffected teenager) or the basis for sound policy, in either direction.But, that could just be me. Another point: I'd like to see more flexibility on both sides regarding taxes. I think it would be worth trying a deep, permanent tax cut on the middle class and even upper middle class, while increasing taxes on the wealthy. One reason: the middle class consume more. Another reason: more of what they consume and invest in is local, or at least in country, rather than out of state. Another reason: folks who start small businesses are, by and large, not wealthy people. The small business that was started 5 years ago and now employs ten people generally was not started by a multimillionaire, but a guy with a little seed capital who finally decided he was, like Mary Tyler Moore, going to make it on his own (or her own, of course). This could be offset by higher income taxes, which I would prefer to a "wealth" tax.
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MsJS: "My personal view of this from the other day still holds. A large financial company without appropriate internal controls gets what it deserves."Well, of course, but they need to be held accountable, in order to discourage better internal controls in the future. Lots of little folks suffer when big financial companies don't keep an eye on the traders burning through billions of investor dollars.
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Kevin:Lots of little folks suffer when big financial companies don't keep an eye on the traders burning through billions of investor dollars.In this case, the only "little folks" likely to suffer are employees of UBS.
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I agree that gov't money is best spent on infrastructure type stuff. I strongly disagree with the argument of "unfair for the non-producers to leech off the producers", because in that case, you need to pay me a great deal more than you pay the CEO. (maybe I should say that I strong agree, but let's identify the players, here).So the top 5% pay 50% of the taxes (income, I am assuming). They own more than 50% of the total wealth of the entire US.Another fix to that would be to raise the minimum wage. Then the top 5% would be paying less than 50% of the taxes, you think?
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Taroya:So the top 5% pay 50% of the taxes (income, I am assuming). They own more than 50% of the total wealth of the entire US.Irrelevant. It is an income tax, not a wealth tax.Another fix to that would be to raise the minimum wage. Then the top 5% would be paying less than 50% of the taxes, you think?Nope. There would just be more unemployed people.
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I think that we will just have to disagree on this one.What are minimum wage jobs, generally? Fast food (are you really going to hire fewer people because min. wage is higher, and risk losing customers because they have to wait? Nope.)Janitorial services: So, is the CEO going to get out there and run the vacuum because he has to pay the old janitor an extra $1 per hour? Nope.Are you going to go dig around the yard because you don't want to pay the gardener? No.What other types of minimum wage jobs are there? They are all jobs that nobody wants to do.In the meantime, those minimum wages, after the raise, will pay basic living expenses. If you want that nice new TV, either save up, or tell yourself tough luck, or get an education and move up to a better-paying job.The current min. wage today wouldn't make my rent on a tiny studio, much less feed me.
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poor people joke follows.What is the difference between a tornado and a Lubbock divorce?After the divorce, only one of them gets a new double wide.
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Heh. Reminds me of Frank Zappa's "Truck Driver Divorce"https://www.youtube.com/watch?v=j5OhXh88_8A
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Scott: "In this case, the only "little folks" likely to suffer are employees of UBS."Which is better than it could be, but wouldn't console me, particularly, if I were an employee of UBS. 😉
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True Lubbock story. Five years ago I closed an estate of a deceased PhD tobacco researcher who died of lung cancer from smoking. His adult daughters inherited a rent house 6 blocks from the Texas Tech campus leased at $267/mo.The last unpaid med bills were only $11K thanks to medicare. The girls offered to deed the house to the hospital for a release but the hospital would not take it. The hospital never filed a proper claim in Probate so after awhile the estate was free and clear. The girsl went to sell the house. They could not get $20K for it.They could not get $15K for it. They are still leasing it to TT students. Tax appraisal was $18k, now $12K.This is a 900 sq. ft. 2-1 stucco bungalow of a type found from TX to CA built in the 1920s, probably from the Sears&Roebuck catalog. I saw the same house for sale in Santa Monica in 2003 for $800K.
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Taroya:are you really going to hire fewer people because min. wage is higher, and risk losing customers because they have to wait?Yes. The notion that in a competitive businesss like fast food there is a bunch of excess cash lying around that can be tapped to to cover a rise in the min wage is wrong. And the idea that raising the min wage will not impact the population of min wage workers is contrary to basic economic truisms. The demand for any good (like labor) will fall as the cost of that good increases.Just use a ridiculous extreme to see the principle…raise the min wage to $500 an hour. Do you think that will reduce the humber of min wage workers being hired? Of course. how about $100 an hour? How about $50? At what point does raising it not result in fewer jobs (all else being equal), and why?
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Kevin:Which is better than it could be, but wouldn't console me, particularly, if I were an employee of UBSIndeed. And I know a few of them.
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New post on Greece
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Taroya and Scott, I can answer Scott's questions but I agree more with him than I do with you, Taroya. Minimum wages can be increased until the industry or service relying on minimum wage workers is no longer competitive in the broader market or until the it is cheaper to replace the workers with machines. As long as the minimum wage is below the actual standard low wage paid in an area it can be raised, as well.Taroya, you gave an example of that. When I hire yard digger I pay about $10/hr. which is the standard low wage here. Raise the minimum wage to $10/hr? No problem. Raise it to $15/hr and for some jobs I rent a back hoe or powered augur or powered tiller for the day and do it myself. I do think a minimum wage, set below the area standard for low wage, does give kids the opportunity to work. As an employer of a 15 yr. old, paying minwage, I get what I pay for, but I may choose to do so, remembering how tough it was to get work when I was a kid.Teen baby sitters are charging $10/hr and adult baby sitters are charging $15.Again, pushing minwage up to the actual lowwage scale would do no harm [or good, really] but beyond that, Scott's rule prevails, I think.
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"Just use a ridiculous extreme to see the principle…raise the min wage to $500 an hour"But that is not reality, and THAT is what makes your argument for naught. And for real, I believe that raising the min wage a couple of dollars will not affect the job market for those jobs. Again, those are jobs that no one really wants, and they really don't want to do that work.That is also in a non-recessionary world. But I also think that if you repeat it enough (heh heh), "Rich guy, you want to pay less taxes? Pay your employees more" people WILL believe it, and it WILL work.Think: it worked for Henry Ford. The only automaker to NOT ask for a handout.
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@ScottC and taroya:The answer to the minimum wage question varies by industry, by place in the business cycle, by the number of available substitute job options, by demand for the product/service being sold, and probably a few other factors I'm not thinking of at this instant. If demand for lattes goes way up, coffee shops will be willing to pay a bit more for staff. If a shop has lousy service but no competition, fewer staff/lower paid staff may work until a new place opens up down the block. If choco-doubleflip lattes become all the rage, appliiants who know how to make them may be able to command a higher wage than those who don't. If latte shops pay minimum wage and a new mall across town starts siphoning away workers, latte shops may have to raise wages, especially if the non-wage perks for mall jobs are better.My point is it's really hard to generalize by focusing only on one factor in the mix and pretend the others won't ever change.
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"Yes. The notion that in a competitive businesss like fast food there is a bunch of excess cash lying around that can be tapped to to cover a rise in the min wage is wrong."If they can pass the cost on to the customer, they will, but the customer often decides that it's too pricey, meaning they don't need as many people to serve the fewer people . . . it's madness, madness, I tell you!The minimum wage, like wage and price controls, seems like a straight forward idea, but is fraught with secondary consequences. However, a small increase will have a small negative impact, compared to a large increase. And, in all fairness, the radical extreme argument has a built-in flaw: it's like arguing that a speed limit of 60 miles an hour on the interstate is pretty much the same as a speed limit of 5 miles an hour on the interstate . . . nobody is arguing that the minimum wage should be $50 an hour, and nobody is arguing that the speed limit should be 5 miles an hour. The argument is, is a $1 more an hour a good idea, minimum wage wise, or not. My argument is that, no, it's not. At least, not inherently.Tennessee has no minimum wage law. California does. California's unemployment rate is 12.1%, Tennessee's is 9.7%. Nevada has a higher minimum wage than the federal, and it's unemployment is 12.9%. On the other hand, Oregon has higher minimum wage than the federal and there unemployment rate is 9.6% . . . a fraction less than Tennessee's! And Oregon's minimum wage is $8.50 an hour! So does the prevailing minimum wage have much real impact?I don't think so. It's mostly a tempest in a teapot. From bls.gov:"Minimum wage workers tend to be young. Although workers under age 25 represented only about one-fifth of hourly-paid workers, they made up about half of those paid the Federal minimum wage or less. Among employed teenagers paid by the hour, nearly 19 percent earned the minimum wage or less, compared with about 3 percent of workers age 25 and over."When it comes to employed adults over 25 (as of 2009), we're arguing about 3% of working people. It's mostly beneficial to those union employees whose wage is contractually a multiplier of the minimum wage. Again, not a significant segment of the overall working population.
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"My point is it's really hard to generalize by focusing only on one factor in the mix and pretend the others won't ever change."3% of adults, 5% of the working population as a whole, make at or below the minimum wage. So, it is multifactor, but it's also worth keeping in mind were talking about a tiny portion of the overall workforce.
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"And for real, I believe that raising the min wage a couple of dollars will not affect the job market for those jobs."It'll squeeze out certain starting jobs, if there's not a way around that for hiring low-skilled workers under the age of 25. If you've got to pay more for a position, and someone with more experience will work in that position for that extra dollar, you will hire that person with more experience. This may be an economically neutral outcome, but that, at least, can almost be guaranteed.
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"Again, pushing minwage up to the actual lowwage scale would do no harm [or good, really] but beyond that, Scott's rule prevails, I think."With 3% to 5% of adult workers paid minimum wage, and many of them employed part time, pushing up the minimum wage is going to have very little impact on the overall economy, one way or the other, I think. But our minimum wage, in real dollars, is low compared to where it was 30 years ago . . . but, then, that's why only 3% or so of working adults make at or below minimum wage.
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ooh, double-chocoflip latte…mmmm. And I don't like Starbucks coffee…Yes, all of those factors do enter into the picture, so discussing generalities without taking that into account is useless. Fun, but useless.I like the speed limit analogy, because that is concisely what I meant to say.Yes, beyond the scale that I set, Scott is correct, that is a no-brainer!I had not thought of the standard low wage. What would be wrong with raising min wage to that standard? Ya gotta live. But nothing says that you have to live WELL.Regarding the states and min wage etc., what type of industries do those states have the most of? Nevada: gambling, waitressing for same. Oregon: ? logging? Tennessee: ? factory? California: Well, movies.I think that the industries hosted in those states would play a large part in general salary, as well as min wage, and standard low.
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I'm going to ask a really, really simplistic question here: is there anything inherently wrong with returning to the income tax rates that were in effect on January 1, 2001?
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No.
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kevinwillis.net said…"I'm going to ask a really, really simplistic question here: is there anything inherently wrong with returning to the income tax rates that were in effect on January 1, 2001?"If we do that, then the terrorists have won….Actually, I'll give you a very honest answer. Yes, because it will raise my taxes. Hit the folks making over $250k, dang it, not poor little me. 😉
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OT, changed my avatar, as Sekhmet isn't really appropriate here. No one is going to flame me much, nor will I flame anyone else.So I will just curl up here, and take a nap.
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Pretty daring to have a cat out amongst so many dogs, taroya.
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LOL, you know, that could be construed more than one way…
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Kevin:And, in all fairness, the radical extreme argument has a built-in flaw: it's like arguing that a speed limit of 60 miles an hour on the interstate is pretty much the same as a speed limit of 5 miles an hour on the interstate . . . nobody is arguing that the minimum wage should be $50 an hour, and nobody is arguing that the speed limit should be 5 miles an hour. The point of raising the radical extreme example, as I pointed out in my original, was to establish the principle involved, not to suggest that anyone was making the argument (which is why I called it a ridiculous extreme). Hence I see no built-in flaw in my argument.The fact of the matter is that, like so much else, there is a trade-off involved. Denying that the trade-off exists, rationalizing a raise in the min wage by saying that it will have no impact on employment, is not useful. It most definitely will have an impact. The question is how big an impact, and what is the benefit being traded for. And then, if one advocates for making the trade off, one ought to be happy living with the result. This was one reason why I raised the other day the notion of trading jobs for regulations. If the number one priority at the moment is jobs, then things like regulations (including the min wage) ought to necessarily become less of a priority. You have to trade one for the other. Obama would, most likely, respond to such a point by declaring "I reject the false choice between more jobs and better regulations," as he has done in other contexts. (Although he would probably phrase it in some demogogic way, like "I reject the false choice between unemployment and poisoned water.") But the fact of the matter is that the choice is both real and inevitable. Far too many people do not seem to appreciate this.Taroya:What would be wrong with raising min wage to that standard?Because the standard varies, region by region, even within the same state. Which is another way of saying that there is no real "standard".
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Mich:I'm going to ask a really, really simplistic question here: is there anything inherently wrong with returning to the income tax rates that were in effect on January 1, 2001?There is nothing inherently wrong with it. Let's, while we're at it, return to the same budget that was in effect on January 1, 2001. Deal?
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Yes, because it will raise my taxes. Hit the folks making over $250k, dang it, not poor little me. 😉And raise mine. But I'm willing to go there to get back to a yearly budget surplus./Let's, while we're at it, return to the same budget that was in effect on January 1, 2001. Deal?No, because we don't have the same economic conditions as we did then. Get rid of the DHS, bring all of the troops home and close down all bases in Afghanistan and Iraq (which will take longer than any of us want) and then we can talk about going back to that budget.
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Mich:Get rid of the DHS, bring all of the troops home and close down all bases in Afghanistan and Iraq (which will take longer than any of us want) and then we can talk about going back to that budget.Talk about it, or actually do it? That's a deal I would make.
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Kevin:Actually, I'll give you a very honest answer. Yes, because it will raise my taxes.Congratulations, you must be rich!!! Because I remember distinctly that, when Bush cut taxes, I was repeatedly told they were "tax cuts for the rich."
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"I reject the false choice between unemployment and poisoned water.") But the fact of the matter is that the choice is both real and inevitable. Far too many people do not seem to appreciate this"——-I am with Obama, I reject that false choice.It is false. That extra regulation preventing poisoned water just found a job for someone that was previously unemployed at all.
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Ah, but to use poisoned water as an analogy is also incorrect. Water is a common commodity, that should absolutely be controlled and regulated by the gov't for the common welfare of ALL.
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Scott: oh, I absolutely think we should do it. It doesn't make us any safer to have those bases in the Middle East (I thought we should have left Saudi Arabia after the first Gulf War, also); I'm kind of on the fence about Yemen.DHS is an amazing waste of money and the only thing that I can see is that it added at least one more level of bureaucracy to every single agency that got caught up in its evil web and hasn't contributed a lick (in my OH so humble opinion) to our security. While they're at it, they should get rid of the National Intelligence Directorate, also, and go back to agency-specific intelligence gathering and analysis. Failing to connect the dots on 9/11 does not justify the creation of a whole new directorate in my book.
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I agee that failing to connect the dots on 9/11 doesn't justify the creation of a whole new directorate.It would have been quite sufficient for the 3 agencies (CIA, FBI, and NSA) to create a channel for communication and sharing of information.The DHS is a tremendous waste of money.
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Taroya:It is false.No, it isn't. Don't allow my gratuitous swipe at Obama to distract from the point. Anything that imposes additional costs on employers will be a drag on employment at some level. The effect may be big, or it may be small. But the effect, and therefore the trade-off, is real and inevitable.
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The "radical extreme argument" objection really is not a valid objection either philosophically or in economics. Reductio ab adsurdum is a valid way to disprove a claim; a claim that is universalizable will not be subject to that attack. In economics, a function purporting to describe a relationship between X and employment must account for all possible values for X.To argue that no one is proposing a high value for X is simply to argue that we should accept the impliedly admitted trade off at values that are being proposed.
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Scott: "Congratulations, you must be rich!!! Because I remember distinctly that, when Bush cut taxes, I was repeatedly told they were "tax cuts for the rich.""Well, yeah, that's because the rich got 'em, too. It should have just been me. Until I start making that kind of money, at least. 😉
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"Reductio ab adsurdum is a valid way to disprove a claim"Is there anything it can't disprove? I can't think of anything that's not a bad idea, taken to the furthest extreme. But that may be a personal limit.
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Michigoose: "And raise mine. But I'm willing to go there to get back to a yearly budget surplus."I don't think that would happen. Even if the economy was better than it is. Unless our spending went down tremendously. Indeed, tax revenues have been higher than they were in 2001, put per capita spending increased. And, frankly, I'd like to see a more progressive tax system that helped us average joes a little more, but taxed folks making $10m a little more than folks making $1m, who got taxed just a little more than folks making $500k. It seems silly to me to suggest there no different between someone making $500k and someone making $5m. If we're going to have a progressive tax system, I think it should progress upward. It's a system weighted to favor the super rich and ultra rich at the "expense", frankly, of the merely rich or averagely well-to-do. I concur: get rid of the DHS. It was just another Full Employment For Washington Bureaucrats Act.
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Mich:Unless our spending went down tremendously.But it would! You agreed to go back to 2001 spending!
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I think you're quoting me, Scott. So, yes, if we returned to 2001 level spending, with 2001 level taxes, and could somehow guarantee a 2001 level economy (per capita, I suppose, since we can't return to 2001 population levels), then we could return to 2001 era surpluses.
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"Is there anything it can't disprove? I can't think of anything that's not a bad idea, taken to the furthest extreme. But that may be a personal limit."I'm not a philosopher; I only play one on the internet.But, I suppose we could take that proposition itself as a test. Let's put it like this: "There is no statement that cannot be proved untrue by the reductio argument."This would imply that there are no true statements, but this is absurd since "there are no true statements" itself could not be true. So the conclusion from reductio ad absurdum must be that there are statements that cannot be disproved by reductio. so there! In a field like economics, there are propositions people tend to believe are universally true or untrue but that in fact are not, because of the complexity of human behavior. It would be true (mathematically) that increasing the tax rate always increases tax revenue IF the tax rate did not also affect income. (But it does.)
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QB: I'm thinking of real world examples, and I can only think of one: if having a hundred dollars is good, then having $1000 is better, and having $10,000 is better than that. I don't really see and end to that.While, obviously, if hiring one person is a smart move, hiring a hundred might be suicide, for a small company. If eating an apple is good, eating a hundred in a sitting isn't, but that doesn't prove that eating apples is bad, only that eating 100 apples at a sitting is bad. Often, reductio ad absurdum arguments are deployed to prove a little of something is bad by arguing that a lot of it is bad, therefor a little must be bad. In fact, most things are generally what we would consider bad when take to irrational extremes. Again, 8 glasses of water a day: good. 80 glasses of water a day might kill you. But that doesn't mean it's not a good idea to drink 8 glasses of water a day.
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And the reverse: arguments are often made that a little of something is good, so a lot must be (like taxes).
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Kevin,I'm not so sure that reductio is disproving any proposition in those examples, or said another way that "eating 100 apples a day" is the logical extreme of something like "apples are good for you." Perhaps it would work with, "The more apples you eat, the better your health will be." But I still think "Apples are good for you" or "Apples are good nutrition" is immune to reductio ad absurdum. I don't think that the susceptibility of a claim to reductio necessarily means that there is no valid principle at work. It may simply mean that it needs to be qualified, which seems to me the case here with wages and employment.
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"And the reverse: arguments are often made that a little of something is good, so a lot must be (like taxes)."Don't you mean tax cuts? If little tax cuts are good, big tax cuts must be better? One thing these conversations tend to ignore is what to cut along with the tax rate. Mark mentioned yesterday that both parties want to be the 'free lunch' party. That extends to us, to a degree, as well. Who can propose not just what they are ideologically inclined to approve, but also has a chance to pass politically? I think it was Scott yesterday who noted that tax hikes would damage the economy, but even if they wouldn't he's against them anyway because he's for smaller government. That is a fine position to hold, but it's not politically viable. Clearly the American people expect a service level from our government that we are collectively unwilling to pay for. What's the solution?
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