Meta-Blog

SEARCH QandO

Email:
Jon Henke
Bruce "McQ" McQuain
Dale Franks
Bryan Pick
Billy Hollis
Lance Paddock
MichaelW

BLOGROLL QandO

 
 
Recent Posts
The Ayers Resurrection Tour
Special Friends Get Special Breaks
One Hour
The Hope and Change Express - stalled in the slow lane
Michael Steele New RNC Chairman
Things that make you go "hmmmm"...
Oh yeah, that "rule of law" thing ...
Putting Dollar Signs in Front Of The AGW Hoax
Moving toward a 60 vote majority?
Do As I Say ....
 
 
QandO Newsroom

Newsroom Home Page

US News

US National News
Politics
Business
Science
Technology
Health
Entertainment
Sports
Opinion/Editorial

International News

Top World New
Iraq News
Mideast Conflict

Blogging

Blogpulse Daily Highlights
Daypop Top 40 Links

Regional

Regional News

Publications

News Publications

 
Politics: What compromising principle will get you ...
Posted by: McQ on Tuesday, June 24, 2008

An interesting column by Paul Krugman for a variety of reasons.
“Owning a home lies at the heart of the American dream.” So declared President Bush in 2002, introducing his “Homeownership Challenge” — a set of policy initiatives that were supposed to sharply increase homeownership, especially for minority groups.

[...]

But here’s a question rarely asked, at least in Washington: Why should ever-increasing homeownership be a policy goal? How many people should own homes, anyway?

Listening to politicians, you’d think that every family should own its home — in fact, that you’re not a real American unless you’re a homeowner. “If you own something,” Mr. Bush once declared, “you have a vital stake in the future of our country.” Presumably, then, citizens who live in rented housing, and therefore lack that “vital stake,” can’t be properly patriotic. Bring back property qualifications for voting!

Even Democrats seem to share the sense that Americans who don’t own houses are second-class citizens.
The first highlighted passage - the question about why ever-increasing homeownership should be a policy goal - is an excellent question.

In fact it is a question that those who observe government should be asking about all sorts of "policy goals" various administrations have taken on.

Since when is it the job of government to "increase homeownership" as a matter of policy? And why?

I can certainly see the argument that government should insure a civil and legal atmosphere in which citizens who wish too can purchase homes.

Which brings us to the second point in the Krugman excerpt - the claim that even "Democrats" seem to share this belief.

As usual, Krugman's memory of history seems to begin about 2000. He obviously has forgotten that before George W. Bush came Bill Clinton. And it was Bill Clinton who began this policy goal of increased home ownership. His reasoning?
We just had a report come out last week asserting that it may be that up to one-third of our children are now born out of wedlock. You want to reinforce family values in America, encourage two-parent households, get people to stay home? Make it easy for people to own their own homes and enjoy the rewards of family life and see their work rewarded. This is a big deal. This is about more than money and sticks and boards and windows. This is about the way we live as a people and what kind of society we're going to have. And I cannot say enough in terms of my appreciation to Secretary Cisneros, who is a genuine visionary, to the Vice President for all the work he and the National Performance Review have done on this, and to all of our partners who are here, all the people in public and private life whose work is homeownership.
This, apparently, was a secret only to Paul Krugman:
President Bill Clinton has stated his belief that homeownership and decent housing are an essential part of the American Dream and wanted to make the dream of homeownership a reality for all Americans.
So, having dealt with Krugman's usual attempt at hackery, let's look at the more important points about his question.

A) is "increasing homeownership" a legitimate policy goal of government?

B) if not, why did the Republicans buy into the Democrat's premise that it was?

It is part "B" which bothers me most about Republicans. And it is part "B" which has them in the horrible electoral shape they enjoy today.

You see, when voters are looking for a clear difference between the left and right, what the Republicans offer instead is a lesser version of the left. Instead of rejecting the premise(s) offered by the left (in this case a policy goal of "increased homeownership" - but it could be Medicare part B, No Child Left Behind, etc.), they accept it but to a much lesser degree. The left offers voters the Mercedes of government programs and instead of standing their ground and saying such programs are not an appropriate or legitimate role for government, Republicans offer a Yugo.

At that point, the battle is lost. It's over. The premise - whatever the left has offered or proposed - has been accepted as legitimate by both sides. In the end, then, all that's left to do is squabble about the size of the program and, as might be imagined, Republicans come off looking cheap and mean-spirited. What they don't come off looking like is a credible alternative to the Democrats.

And, unfortunately, they end up with candidates representing their party like John McCain. He's no accident - he's precisely what the Republicans have become.
 
TrackBacks
Return to Main Blog Page
 
 

Previous Comments to this Post 

Comments
It’s a little hard to end suburbia, and cram everyone back into the cities, where they re dependant on mass transit, when they have the opportunity to own their own homes.
 
Written By: Bithead
URL: http://bitsblog.florack.us
If my choice is between someone who says he’s going to take other people’s money, by force if necessary, and use it to benefit me, and someone else who the same thing, except that he won’t take as much and I won’t receive as much benefits, who do you think I’m going to vote for?
 
Written By: Diffus
URL: http://
Hopefully neither.
 
Written By: McQ
URL: http://www.QandO.net
It’s a little hard to end suburbia, and cram everyone back into the cities, where they re dependant on mass transit, when they have the opportunity to own their own homes.
Who wouldn’t want to be part of the enviro-marxist dream?
 
Written By: jpm100
URL: http://
"the Democrat’s premise that it was"

I think you will find, if you go back farther, that promoting home ownership has been a bipartisan policy for many years. The first GI bill, for example, passed in 1944, guaranteed home loans for veterans. The Federal Housing Administration was started in 1934 to promote home ownership. If the Republicans bought on to a Democratic idea, they bought it so long ago that it really makes no difference.

 
Written By: timactual
URL: http://
Well he is right on about one thing, Bring back property requirements for voting, hell yeah!
 
Written By: kyleN
URL: http://impudent.blognation.us/blog
The main issue is one of "giving the people what they want". Republicans are not, and have not, convinced Americans that the government should not do things that the American people want, like laws to advance homeownership. So, as the post suggests, both sides pass legislation that appears on the surface (or pretends) to advance these policy goals.

I wish I could say that there is a difference between the D’s and R’s on this, but the sad reality is that both sides allow special interests to write the legislation that is purported to advance these goals, and the usual benefactor are the people who pay the lobbyists to get their own legislation passed, and the policy goal is rarely reached, but Congresscritters get their campaigns financed so they can keep their cushy jobs and keep letting lobbyists write laws and tell them how to sell them.

Imagine if Congresscritters had to physically write their own laws?

Imagine if they had to read every law they had to vote on?

There would only be 3 bills a year instead of 6500!!!

But that’s one law they won’t write!



 
Written By: mythbuster
URL: http://
I think that increasing individual/family home ownership is a good policy, and a wise one.

Because once someone has real property to pay for, hold on to, manage, and defend against government, he is back in the American system, with at least one leg.

Naturally, in encouraging such a policy the government will do its usual disasterous job, but at least they are encouraging individuals to own a piece of the pie.

As far as cities go, home ownership there is easy enough via condos and co-ops (though with co-ops what you own is a proprietary lease, but that is not a huge step down from the outright ownership one has in a condo because the proprietary lease can be sold almost as immediately as real property).

Owning apartments in cities is for many just as good as or better than owning a single-family home in the suburbs. (There’s a lot more going on in cities than there is in suburbs.)

I would make home ownership part of a three-part effort to make American society as private a society as possible. The other two parts would be a private retirement system (look to the Chile model as a starting point) to replace Social Security, and a private education system (i.e., get rid of public schools, which I think could happen in a generation, roughly as rapidly as the public schools were destroyed and turned into cash cows in the teachers unions takeover of them).

None of this comes by way of perfect principles, but note that government’s control is steadily reduced.

My idea for replacing Social Security is here.

I think that the instinct of Americans is to own property and that the so-called underclass, lured into government dependency by the Great Society, can regain its traction simply by being homeowners. I think that Americans still have good instincts and that those good instincts are based in the sense that they are indeed individuals. Much of the confusion of "entitlement" is the result of having nothing to defend in the protracted inter-generational reliance on government programs. In that sense, a two-room trailer on your own property is better than a lifetime entitlement to an apartment in a public housing project.
 
Written By: Martin McPhillips
URL: http://mcphillips.blogspot.com/
I think you will find, if you go back farther, that promoting home ownership has been a bipartisan policy for many years.
The question is, should it be? The second part of that was simply to point out that, as usual, the depth of Krugman’s history is only the year 2000.
 
Written By: McQ
URL: http://www.QandO.net
I think that increasing individual/family home ownership is a good policy, and a wise one.
Ummm ... because how would we ever figure out its a good idea and pursue homeownership without government making it a policy goal?

Or asked another way, how did we get along without them for the first 200 years of our country’s existence - speaking of buying into premises?
 
Written By: McQ
URL: http://www.QandO.net
Would you suggest repealling the mortgage interest deduction, an obvious nod to the policy goal of increasing home ownership?

Along the same vein, would you suggest repealing the tax benefit for capital gains as compared to regular income, an obvious nod to the policy goal of spurring capital investment?

 
Written By: mythbuster
URL: http://
Ummm ... because how would we ever figure out its a good idea and pursue homeownership without government making it a policy goal?

Or asked another way, how did we get along without them for the first 200 years of our country’s existence - speaking of buying into premises?
Well, think of it as counter-programming. Buying a home is buying out of government, and a government that is essentially social*st to promote such a self-annihilating policy is good. Is it, for instance, superior or inferior to promoting public housing?

As far as this "first 200 years" thing, we stopped being in the "first 200 years" about 100 years ago. In that time we’ve been getting a government colonoscopy by the day. Maybe the U.S. government doesn’t know exactly how to promote the right things, but when it’s been promoting the wrong things to the exclusion of right things, I’ll take the promotion of a right thing, even if they make something of a mess of it.

That said, was it wrong for Alexander Hamilton to insist on the minting of pennies so that people unused to having money in their pockets would get used to and avail themselves of commerce?

Even if you think of government as a stopped watch, it’s going to be right twice a day. Owning a home is good, and it’s an introduction to risk, because you can always lose that home. So it puts some individual fight back where it’s been getting drained for generations.

P.S.: Your filter is filtering out the word "social*st."
 
Written By: Martin McPhillips
URL: http://mcphillips.blogspot.com/
As a matter of fact, I’d like to see a complete revamping of the tax code which allowed people to keep more of their money.

Taxes are there to fund the necessary operations of government and nothing more. It is not a power which should be used to try and engineer behavior.
 
Written By: McQ
URL: http://www.QandO.net
As a matter of fact, I’d like to see a complete revamping of the tax code which allowed people to keep more of their money.
There’s ALWAYS winners and losers.

Do you prefer a consumption tax, which makes high income low spenders the winners, and low income high spenders the losers.

A revenue neutral tax overhaul is a defacto redistribution of the tax burden.

So who do you favor and who do you want give a tax increase in your idea of a good overhaul?

And don’t you think this overhaul will engineer behaviors, whether that is your intention or not?
 
Written By: mythbuster
URL: http://
Even if you think of government as a stopped watch, it’s going to be right twice a day. Owning a home is good, and it’s an introduction to risk, because you can always lose that home. So it puts some individual fight back where it’s been getting drained for generations.
Per our tradition of government, it exists to provide the proper legal environment (protects its citizens from force or fraud)for its citizens to pursue their dreams - not the government’s idea of what those dreams should be.

I acknowledged that:
I can certainly see the argument that government should insure a civil and legal atmosphere in which citizens who wish too can purchase homes.
Beyond that, I see no role for government. That is if you’re a small government type - a claim Republicans constantly make.

Re: Soci*list - That’s because it has "ci*lis" as a part of it.
 
Written By: McQ
URL: http://www.QandO.net

Re: Soci*list - That’s because it has "ci*lis" as a part of it.
AHA! Much is exlpained.

Anyway, and as I’ve pointed out elsewhere... Home wonership does ehnace social stability... and for those wanting social CHANGE...(there’s that word, again) it is a roadblock to such change. Change, such as population redistribution, for example. That’s been a stated goal of the UN for deacdes, now.... and private home ownership has been a stopper in that drain for as long.

On that basis, it should shock nobody that Krugman, Klein, and Yglasias, grade A leftists all, making the same anti-home ownership noises.




 
Written By: Bithead
URL: http://bitsblog.florack.us
"Would you suggest repealling the mortgage interest deduction, an obvious nod to the policy goal of increasing home ownership?"
Yes, and I have two homes/mortgages and I benefit substantially from this deduction. Like all tax breaks, it distorts the market.

The tax code should be very simple. In the short run I’d accept slightly higher taxes to simplify the code to something like a flat tax. In the long run I’d prefer fewer government services and thus lower taxes. And I think everyone who earns income - no matter how little - should pay some tax. People that don’t pay tax but benefit from services have no skin in the game and thus no incentive to keep government in check.
 
Written By: Grimshaw
URL: http://
"Well he is right on about one thing, Bring back property requirements for voting, hell yeah!"

I’ve always been partial to literacy tests, myself. I think it would be deliciously ironic when (not if) graduates of public high schools fail them in large numbers.

"The question is, should it be?"

I don’t think it matters at this point. Such policies are here to stay, and all that is left is to quibble over the size and details of them.

"The second part of that was simply to point out..."

Oh. Right. Never mind. I guess it should be ’I think *he* will find,...’, but then that doesn’t fit his program. Another policy that is here to stay.
 
Written By: timactual
URL: http://
"Would you suggest repealling the mortgage interest deduction, an obvious nod to the policy goal of increasing home ownership?"
First, the mortgage tax deduction is not a "nod to the policy goal of home ownership." It is a boon to the housing and construction industry, pure and simple.

Second, I agree with Grimshaw. I also own multiple properties and would accept "slightly higher taxes to simplify the code to something like a flat tax." One of the problems with the tax code in the country is those who pay little or no taxes have just as much say as those who pay the most. As anyone who has studied the issue knows, the top 10% of earners (taxpayers) account for more than 80% of the income tax based revenues. It doesn’t take a genius to figure out those in the lower income brackets would love to stick it to the "rich", thereby increasing this disparity. The founding fathers saw this as an issue and that was why the right to vote was initially limited to land holders. The rationale was no one would be allowed to vote unless they had a stake in the outcome - the fear of someone "buying" an election through simple graft or by promising the electorate the moon (any current panderers come to mind?) terrified the founding fathers. A flat tax code would partly remedy this. You only pay for what you expend. Allowances could be made for staples such as food and medical but beyond that, you are taxed on what is consumed.

For this, I would forgo all of the exemptions on the books.
 
Written By: SShiell
URL: http://
McQ:
Beyond that, I see no role for government. That is if you’re a small government type - a claim Republicans constantly make.
Private property is the single most anti-government program that we have left to us. If the government encourages it, it’s taking itself, ultimately, out of at least one equation.

Private — individual — pensions and medical insurance. Private schools. Privacy in general, and pretty soon, you’re talkin’ some kind of private society.

You begin to take the government out of the equation and back down to its real formal functions.
 
Written By: Martin McPhillips
URL: http://mcphillips.blogspot.com/
you are taxed on what is consumed.
Have you consider the impact of this policy?

Assuming revenue neutrality, the top 1% earners, who are taxed at a net rate of around 25% now, will only pay taxes on what they spend, so assuming someone earning $5,000,000 spends $1.5M, and invests the rest, will only pay taxes on $1.5M. So are we suggesting that the rate is high enough to cover the difference, or are we going to distribute that burden somewhere else?

And if we exempt food and medicine, so the poorest don’t pay much in taxes for the necessities, where does leave us to redistribute that tax burden that was lifted from Mr. 1%’s $3.5M?

What do you think that rate would need to be in order be revenue neutral?

The ratio of tax obligation shrinks as wealth grows because the wealthy spend proportionally less on consumables. Setting aside the question of rebates, a working class individual who must spend all income, will find his expenditures and therefore his income base taxable at 100%, whereas wealthy individuals who save or invest a portion of their income will only be taxed on the remaining income.

So by definition, this will be a massive tax break who don’t (and don’t need to) spend all of their income, that will have to made up by taxing 100% of lower incomes at a higher rate than they pay today.

Winner, people who can afford to save, losers, people who have to spend all of their money.

I understand the ethical or moral argument, why should someone pay more just becausee they are more succssful, but if that is the guiding principal, then we should divide the governments expenses each year by the number of inhabitants, and apply that tax, and if they can’t afford it, then charge them interest and make them make payments. And the next logical step is that if they have children, they would have to pay their tax burden until the reach maturity, or perhaps we could just defer it for children, and give them an accumulated debt for their 18th birthday.

Unless of course we are going to tax capital investment, when you buy stock, or a combine for your farm, then you pay the consumption tax on it. That would solve the regressivity of a consumption tax, but the impact on industry could be profound.

On the plus side, when you devastate the middle class with this tax hike, they will bite back at the polls, the only question is whether bite government spending as you might want them to. Or maybe they will bite into the tax policy itself, supporting a massively progressive tax system that takes 70% of everything over $200,000?

Whatever the outcome, there will be unintended consequences, because there always are.


Are you sure you have thought this through?
 
Written By: mythbuster
URL: http://
Private property is the single most anti-government program that we have left to us. If the government encourages it, it’s taking itself, ultimately, out of at least one equation.
A) with Kelo it’s hard to see how it’s really "encouraging it", especially as it now reserves the right to take your house if someone else wants to build a c*sino which will bring the state more tax revenues.

and

B) as I pointed out, it has a perfectly legitimate way to ’encourage’ ownership - make sure the laws are enforced fairly and protect the citizenry from force and fraud.
 
Written By: McQ
URL: http://www.QandO.net
Are you sure you have thought this through?
Yes. Currently, outside of small allowances for IRAs and 401K - which only defer the tax - there is virtually no incentive for saving or investing in this country. The best you can do is a Roth IRA - which I have maxed from day one - but even this is a limited advantage. And when you do save/invest, you better be careful because you may incur short or long term capital gains.

Capital Expenditures in the market place do not come from government revenues. They come from a myriad of sources - venture capitalists, banks and savings institutions, funds of various types and flavors - in short they come from people saving their money and investing that money in the economy. You want to grow the economy, you need to incentavize the process freely allowing money to flow into the economy.

Is there an economy like this - Yes. Take a look at Hong Kong. Flat rate consumer tax of 10%. PERIOD. All expenditures - 10%. Top to bottom - 10%. And you do not see the people whining about how they are disproportionally affected by the taxes. Everybody can get ahead. You are only left behind if you choose not to play. And in the last 60 years, Hong Kong has not suffered from a single recession. There have been ups and downs on their Stock Market but not a single recession as we define it. Now it is true Hong Kong does not have large military expenditures and such so 10% may not cut it - the point here is the only realy question is where do you put the rate so as to revenue neutral. (Note: Hong Kong rarely goes into the red without a definitive plan for getting the revenues back so there is very little community debt.)

Can a process like that be established in this country? No? Why not? Could there be unintended consequences? Yes. But that is true depending on your choice of dental floss.

Have I thought this through? Yes - have you?
 
Written By: SShiell
URL: http://
with Kelo it’s hard to see how it’s really "encouraging it",
Now, McQ, you know that’s a non sequitur.
[the government] has a perfectly legitimate way to ’encourage’ ownership - make sure the laws are enforced fairly and protect the citizenry from force and fraud.
I’m not pure enough yet.

Another thirty days of fasting.
 
Written By: Martin McPhillips
URL: http://mcphillips.blogspot.com/
Yes, and I have two homes/mortgages and I benefit substantially from this deduction. Like all tax breaks, it distorts the market.
It’s an individual tax break available to (almost) anyone who buys a home.

But it doesn’t buy the home. It says, "for owning a home and making yourself more substantial and independent, take this deduction."

Now, that’s so diametrically opposite from "we’re taking 12% of your income to pay these other people their Social Security benefit" that I have a difficult time seeing how it even makes it onto the queue as something that needs changing.

In fact, when you think about it, as the principal capital asset of most Americans, the home is about the only thing that stands between them and government-induced poverty when they retire.

My attitude is: target the redistribution, not the honest to God breaks.

O.K., let’s go to the flat tax. In the meantime, keep encouraging people to buy homes, before they forget what buying and owning something that big means.
 
Written By: Martin McPhillips
URL: http://mcphillips.blogspot.com/
Another thirty days of fasting.
For you, McP, at least 60.
 
Written By: McQ
URL: http://www.QandO.net
Now it is true Hong Kong does not have large military expenditures and such so 10% may not cut it - the point here is the only realy question is where do you put the rate so as to revenue neutral.
The rate is estimated to be around 60%.

So which would happen, since you have thought this through:

1. Taxpayer revolt at the polls shifting back to highly progressive taxes?
2. A virtual standstill in consumption as people grow their own food and buy everything from yard sales and Craigslist?
3. A taxpayer revolt to reduce government spending?

I would suggest that you would get a lot of the first, a bit of the second, and almost none of third.

It would be the end of conservativism in this country, and though I am not a conservative (not exactly a liberal either), I appreciate the need for the political tension between conservative and liberal ideals.

So go ahead and dispute the rate, perhaps you can argue that it would only be 40%. If you are making a ton of money, and not spending it on consumption, you would get a tidy tax break, for everyone else, bang, zoom, to the Moon!


 
Written By: mythbuster
URL: http://
60% - Bullsh*t!

We have today in the (Year 2006 estimated) US approximately a $13.13 Trillion Gross domestic Product.
(Source: https://www.cia.gov/library/publications/the-world-factbook/print/us.html)
For the year 2008, the GNP is estimated at $14.35 Trillion. (Source: http://www.data360.org/dsg.aspx?Data_Set_Group_Id=231)

Assumimg we maintain a $3 Trillion budget, that equates to 20.9% - but then again we are talking about a revenue neutral figure aren’t we. So to be fair, adjusting for the anticipated shortfall of $165 Billion, we come to a total of: 19.75%. (Note: 1994 Congress introduced HR 4585 to make the flat rate 17.0% - although to be fair "Citizens for Tax Justice" claimed that would result in a $200 Billion deficit and other estimates varied up to about $265 Billion) It is also interesting to note that tax revenues versus GNP has maintained at approximately the 19.5% level for the last 50 years in this country, regardless of the tax rate.

Additionally, we have been speaking about personal income tax. Applying 19.75% accross the board would be a huge boon to Corporate America. Why? Because their top rate today is in excess of 35% - up to 39% depending upon the earnings, 35 for the max rate (Source: http://www.smbiz.com/sbrl001.html).

It is also interesting to note that your 60% quote had some qualifiers:
This estimate is predicated on several assumptions: (a) the intended statutory sales tax base would be a very broad measure of consumption; (b) about 20 percent of that base would be eroded due to avoidance, evasion, or legislative action (i.e., loopholes), and (c) the NRST would have a demogrant equal to the poverty threshold for each family times the sales tax rate.
Interesting. Have I really thought this one out. Yes. So, as you suggested I have disputed the rate.

Your turn.
 
Written By: SShiell
URL: http://
Time Out - My Bad, I almost forgot - Prices would come down because there would no longer be the requirement to build the tax rate into the price at the cash register - or at least as high as they are today.

Also of Note. You Brookings Institute link’s 60% rate included all taxes, federal and state. The difference between the states is huge. They range from Alaska which has actually paid its citizenry from their surplus rather than tax them along with several states that have no Income tax to the great states of New York adn California that taxes the taxes you pay. So I was referring only to federal rates. So Sue Me.

Now - Back to You.
 
Written By: SShiell
URL: http://
Uh Oh - Time out again. Another point - or I should say in response to your three points:
1. Taxpayer revolt at the polls shifting back to highly progressive taxes?
Of course that would happen. With approximately 50% of the electorate paying virtually no tax at all, that would be quite a blow. God help everyone should have a stake in what is happening with our government today.
2. A virtual standstill in consumption as people grow their own food and buy everything from yard sales and Craigslist?
Way too simple. But what the heck, do you think that it is not happening now? Been to a Flea Market or Farmer’s Market lately? You been zooming to the moon way too much.
3. A taxpayer revolt to reduce government spending?
Hold you calls listeners, we have a winner! Mind explaining how that is a bad thing?!?!

And you keep thinking I haven’t thought this out. Time back in again - Back to you. (Ain’t this FUN?)
 
Written By: SShiell
URL: http://
Interesting. Have I really thought this one out. Yes. So, as you suggested I have disputed the rate.
Of course you have, but I don’t see where you have shown a consumption tax rate that would be revenue neutral. You are showing a percentage of our entire GNP, and then showing that 20% of that would pay the tax bill, but you completely ignore how much of that would be non-taxable, unless you really are willing to tax business capital investment. The portion of our economy that would be subject to a consumption tax would be closer to $7T, not the entire $14T GNP, so already, your 20% tax rate must be doubled to at least 40%. Take out the avoidance discount, and 20% is a conservative estimate, unless you want an army of IRS agents scouting yard sales, Ebay, and mom and pops (can you say authoritarian?). But if you want to completely eliminate this elemen in order to make an argument, let’s pretend that not one person will avoid these consumption taxes and add that 20% back in, you are STILL over 40%.
Time Out - My Bad, I almost forgot - Prices would come down because there would no longer be the requirement to build the tax rate into the price at the cash register - or at least as high as they are today.
Considering that the vast majority of tax payers would be paying MORE in taxes, the opposite would be true.
Also of Note. You Brookings Institute link’s 60% rate included all taxes, federal and state. The difference between the states is huge. They range from Alaska which has actually paid its citizenry from their surplus rather than tax them along with several states that have no Income tax to the great states of New York adn California that taxes the taxes you pay. So I was referring only to federal rates. So Sue Me.
I think you misread the study, there were two rates, one to replace just federal income taxes, and that would be around 21%, and another to replace all federal taxes, that would be around 60%. I did not read anywhere in the study where it talked about replacing state or local taxes.

"To replace all federal taxes on a revenue-neutral basis over the next 10 years would require a sales tax rate of about 60 percent."

Now if you want to have a consumption tax of 21% and then have people keep paying payroll taxes, then you will be hitting the median wage earners who spend alomst all that they earn with a triple whammy of much higher taxes in the form of this consumption tax and give them no relief from payroll taxes, which is all many of them pay today, and they will stil pay for corporate taxes passed on the prices of the products they are buying.


Your turn.
 
Written By: mythbuster
URL: http://
And you keep thinking I haven’t thought this out. Time back in again - Back to you. (Ain’t this FUN?)
It is fun.

I understand that a major underlying desire of a system like this would be to get people to want to make the government small enough to drown it in a bathtub, I get it. I just think it is extremeley naive, and totally ignores political reality.

Picture this, your tax plan is in place for one year, people are paying out the noses for every thing and have far less buying power than had before.

Are they going to blame YOU for doing this to them, or are they going to suddenly decide that the government is to big?

They may well decide the government is too big, but they will have thrown out every single person that even hinted that they thought this was a good idea, and the people replacing them will be promising and delivery progressivity that would have made FDR blush.

As bad as this would be for conservatives, it would be terrible for the country, because although I think we have moved to far to the right in many areas, the backlash from this would cause a move much, much farther to the left than I would like.

 
Written By: mythbuster
URL: http://
I believe Britain actually got rid of their mortgage tax deduction. I wonder if they made it revenue neutral or they viewed as a good way to raise more money.

I also wonder if some people "over-bought" because the interest is deductible.
 
Written By: Harun
URL: http://
Also, if you want to know how a flat tax would work, and its not just in HK, but in many European countries now, check out Econtalk’s podcast on the subject.

It may not look politically possible right now, but as more and more countries adopt these flat taxes, it will look smarter and smarter.

Its one thing when the lefties can convince people that its only crazy right wing kooks who want a flat tax, or private social security, or school vouchers. Its another when Ireland, Sweden, Baltic states, etc. have some of these policies in place and are doing well.

 
Written By: Harun
URL: http://
but you completely ignore how much of that would be non-taxable, unless you really are willing to tax business capital investment.
We already do this as I have already noted. Show me where I have exempted it. Show me where I have exempted anything?
Picture this, your tax plan is in place for one year, people are paying out the noses for every thing and have far less buying power than had before.
Your picture - not mine.
Are they going to blame YOU for doing this to them,
Me? Little ole Me? Knock yourself out.
or are they going to suddenly decide that the government is to big?
I repeat, "Mind explaining how that is a bad thing?!?!"
Considering that the vast majority of tax payers would be paying MORE in taxes, the opposite would be true.
Again, I will repeat myself, "Of course that would happen. With approximately 50% of the electorate paying virtually no tax at all, that would be quite a blow. God help everyone should have a stake in what is happening with our government today."

Somehow in this discussion you may have gotten the impression that this would benefit me. Far from it. I make in excess of $150K per year. After all is said and done, after all the allowable deductions per the law, my effective Federal tax rate came to just under 14% for the past year. My effective tax liability would approximately double under this plan. I am saying I am willing to make it 20% (OK - 19.75% - give me a lttle slack here) of everything - nothing is deducted. NOTHING!

And lastly,
I understand that a major underlying desire of a system like this would be to get people to want to make the government small enough to drown it in a bathtub, I get it. I just think it is extremeley naive, and totally ignores political reality.
You are the one supporting Obama - and you call me naive?!?!
 
Written By: SShiell
URL: http://
You are the one supporting Obama - and you call me naive?!?!
Yes.

I wonder if they will be calling Obama naive the same way that people are still calling GWB dumb, long after they get their clocks cleaned by the dumb (or naive) guy.

Remember, just so you don’t fool yourself, if no one else, that the whole "naive" thing is a narrative, an attempt to define Obama, created because his youth and ideals make it possible for this framing to work. Obama is not Chauncey Gardner, as much as people want to portray him in that way, and anyone that pays any attention to this stuff (like you), knows full well that Obama is idealistic, but also clearly calculating and tough.

Obama has an agenda, and it’s pretty easy to define, since he wrote a book explaining it, but like all pols in national races, he IS trying to be all things to all people, just like McCain is, Obama just happens to be better at it.

If Obama were naive, he would have been out of this race before it started....
....

So what’s that tax rate that you want to make a national sales tax?

You can’t just tax the GNP, since at least half of the transactions that make up the GNP. A more appropriate tax base would be the current transactions taxable under state sales tax guidelines, which is how the Brookings study did it. You disputed avoidance in the Brookings calculations, which would only reduce the 60% to around 50%.

So either describe what is wrong with the Brookings calculations that would bring it down to the 20% you came up with, or show me new calculations that can actually be applied.
I repeat, "Mind explaining how that is a bad thing?!?!"
It’s not a bad thing, it would be a good thing, but in this scenario, it would be a very bad thing for conservatives, and for the country, and as a result of conservatives becoming political pariahs in the country, it will move too far to the left.

 
Written By: mythbuster
URL: http://
So either describe what is wrong with the Brookings calculations that would bring it down to the 20% you came up with, or show me new calculations that can actually be applied.
I already did. The Brookings figure had caveats - I even mentioned them in passing - I do not. You also assume the 20% figure (approximate) is a hard figure for all areas. I already stated (maybe not specifically enough) that it may not be the same the for Corporate rate.

To be fair, 20% may not be the rate but 60% is BULLSH*T. To be "Revenue Neutral" we don’t even have that rate today - so how can Brookings put out 60 as the flat rate milestone. Show me how, with a current Max Personal Income rate, after all possible deductions, of approximately 35% and a Max Corporate Rate, after all possible deductions, of approximately 35%, Brookings can equate a flat rate of 60?

Currently, the IRS shows personal income revenues to be $1.37 Trillion. (Source: http://www.irs.gov/taxstats/article/0,,id=102886,00.html) Incomes for the same period, as shown in the Tax Returns = $7.44 Trillion. (Source: http://www.irs.gov/pub/irs-soi/05in12ms.xls) Final effective rate for total = 18.4%. And I haven’t even touched the Corporate numbers.

Do some math of your own. Show me where I am wrong. You haven’t so far. You take the Brookings numbers at face value. You don’t even get into the hows and whys of their calculations. But then again, I am talking to someone who takes Obama at face value, regardless of the hows and whys. So I guess there is no surprise there.
 
Written By: SShiell
URL: http://
Let’s take it a step further. How deep does it have to get for the Brookings 60% number to make sense.

There are several sites that address personal savings rates. According to the Bureau of Economic Analysis (BEA), personal savings rates for 2008 (As a percent of disposable income) is less than 1%. (Source: http://www.bea.gov/briefrm/saving.htm) According to an MSNBC Report recently:
The Commerce Department reported Monday that the savings rate fell into negative territory at minus 0.5 percent, meaning that Americans not only spent all of their after-tax income last year but had to dip into previous savings or increase borrowing.
(Source: http://www.msnbc.msn.com/id/11098797/) So savings in America does not really affect the equations. So let’s look at personal consumption rates. According to a recent Business Week article:
For example, the nation’s current annual personal consumption of $10 trillion includes about $1.8 trillion in outlays by Medicare, Medicaid, and private health insurance providers.
(Source: http://www.businessweek.com/magazine/content/08_16/b4080000602263.htm) So, if you subtract the Medical aspects entirely, you are left with a personal annual consumption rate of $8.2 Trillion. This is even higher than the previously mentioned Incomes as shown in the Tax Returns = $7.44 Trillion. Given the consumption rate is approximatley correct, that would now equate to an effective flat tax revenue neutral rate of 16.7%. The difference could very well be made up by further eliminating food and other essential staples. That is well below the Brookings posted number of 60% and even well below your accomodation of 50%. So again, "Show me where I am wrong."

So, First: How in the world can conversion of a Flat Tax which would provide the following - and these would not be unintended consequences but real results:
1) Virtual Elimination of the IRS - they would now be a collection agency only.
2) Virtual Complete Simplification of the Tax Code (Have You tried to even lift that puppy lately?)
3) With the elimination of all Tax Loopholes, the result would be the virtual elimination of Lobbyists - no money to be loopholed out of a now non-existent tax code, no money for Lobbyists.
4) No more April 15 tax filings - no more tax filings ever except as a result of cashier receipts, etc, but no more tax filing burden on the American people.

With that in mind, can you still say "It’s not a bad thing, it would be a good thing, but in this scenario, it would be a very bad thing for conservatives, and for the country, and as a result of conservatives becoming political pariahs in the country, it will move too far to the left."

You do have a point - now people who have never paid a dime in taxes their entire leives will have to pay "at the pump" as it were. But don’t you also see the adoption of a Flat Tax Rate would be the answer to a Conservative and even a Lebertarian’s prayers. I see the Far Left as being castrated by this and that is a very good thing in my mind.

And Second: It is interesting to note a discussion with an Obama supporter, whose Campaign Slogan is "Yes, We Can" arguing so vehemently "No, We Can’t." I find that ironic, don’t you? LOL
 
Written By: SShiell
URL: http://
And Second: It is interesting to note a discussion with an Obama supporter, whose Campaign Slogan is "Yes, We Can" arguing so vehemently "No, We Can’t." I find that ironic, don’t you? LOL
It depends on what the meaning of "is", is.

"Yes, we can" tax the middle class out of existence if the calculations I have shown are correct.

I would submit that a consumption tax rate of 40% or greater, or a consumption tax of 20% or greater than does not eliminate payroll taxes, would be a massive cut in the buying power and quality of life for median wage earners (and some above and all below median).

Do you agree with this premise?

Once we have that settled, we can delve further into the calculations themselves.

Might as well establish the goal line before we run another play.
But then again, I am talking to someone who takes Obama at face value, regardless of the hows and whys. So I guess there is no surprise there.
Unnecessary ad hominem does nothing to advance the discussion (but if you have a funny jab, at least that has humor value, which is always worthwhile).


 
Written By: mythbuster
URL: http://
I would submit that a consumption tax rate of 40% or greater, or a consumption tax of 20% or greater than does not eliminate payroll taxes, would be a massive cut in the buying power and quality of life for median wage earners (and some above and all below median).

Do you agree with this premise?
Take a moment and go back to the very beginning of this discussion. Not once have I provided a revenue neutral replacement for:
1) Payroll Taxes
2) State Taxes
3) Excise Taxes
4) Death Taxes
5) Any of the plethora of taxes you may bring into the discussion.

I have only addressed a single aspect and that is the Federal Income Tax burden on the American Public. Given that single point of discussion, No, I do not agree with the premise that "a consumption tax rate of 40% or greater, or a consumption tax of 20% or greater than does not eliminate payroll taxes, would be a massive cut in the buying power and quality of life for median wage earners." I never brought out any 40% figure (a new one to me) nor have I ever mentioned anything regarding the entire tax burden within the system.

You challenged and I responded that it could be done without even approaching a 60% rate level. Has my apprach been somewhat simplistic? Yes. Moreover, when you get into the Brookings calculations, that 60% Brookings figure is the tax exclusive rate to replace all taxes. The equivalent tax-inclusive rates are 21% to replace Income Tax and 37.8% to replace all Federal taxes. Considering I was using a fairly simplistic approach for the issue of Federal Income Tax alone, my figure of 19.75% (OK, round up to 20) is not a bad one.

I made a simple premise - a flat tax could work. Unintended consequences? Sure - even blowing your nose could bring unintended consequences. But there could be some real benefits to the process (see previous posting) and there would be the further advantage of allowing a person to save and have those savings, whether earning dividends or interest, to be done without the burdens of tax. It would make investing in this country affordable and even attractive to the entire gamut of the population.

What you refer to as the Progressive Tax process we currently enjoy is not Progressive at all, it is regressive - you are penalized for success. Don’t even bother with the Left talking points about how the richer you are the more able you are to be taxed. BULLSH*T! A return to anything even closely resembling the Carter Years (Max personal income tax rate of 70%) would be disastrous to all but the bottom rung of the population. And it wouldn’t matter much to them because with such a regressive tax system, there would be little chance and absolutely no incentive for them to climb out of the economic dungheap.

And lastly, if you consider my jabs at your political affiliations to be an "unnecessary ad hominem", I am so sorry - you have been so wronged, you must be in bad need of solace. You may go over to your choice of the nearest priest, minister, or rabbi and get your card punched.

Feel Better now?
 
Written By: SShiell
URL: http://

 
Add Your Comment
  NOTICE: While we don't wish to censor your thoughts, we do blacklist certain terms of profanity or obscenity. This is not to muzzle you, but to ensure that the blog remains work-safe for our readers. If you wish to use profanity, simply insert asterisks (*) where the vowels usually go. Your meaning will still be clear, but our readers will be able to view the blog without worrying that content monitoring will get them in trouble when reading it.
Comments for this entry are closed.
Name:
Email:
URL:
HTML Tools:
Bold Italic Blockquote Hyperlink
Comment:
   
 
Vicious Capitalism

Divider

Buy Dale's Book!
Slackernomics by Dale Franks

Divider

Divider