Tuesday, October 14, 2008

Taxes and "Wealth Redistribution"

The whole thing with "wealth redistribution" or "fair taxes" is that no matter what, everyone knows that taxes need to be paid to keep the system we enjoy running smoothly. The question then becomes how much is "fair". Most people think fair should be for them to pay less. If everyone paid what they thought was fair, we would have horrible roads, the elderly would be out in the snow, and our military would be pathetic. Some favor a flat sales tax to replace the income tax as a panacea, but there are significant problems with this as well, not the least of which is that this is also a regressive tax structure. Nearly all first world countries have a "progressive" tax structure by which the more you make, the higher the rate of the tax. The idea behind this is that it takes a certain amount to live, a certain amount to live comfortably, and another amount to live REALLY comfortably. Economists assign value to these dollars in the form of what is called "marginal utility". The concept is that one hundred dollars is much more important to someone making 20K a year than to someone making 200K a year. Therefore, even though the percentage is higher in terms of the income tax, the goal for many is to have roughly the same contribution when adjusted for the marginal utility of that money. You don't want to "punish" success, but you also need to make sure that you are giving the most opportunity to stay in the middle class and not slip under the poverty line for anyone that is employed.

Yes, there are some people that are not elderly or disabled that are on welfare. About 1% of the total federal budget is spent on this, which is a large amount in sheer dollars, but compared to many other line items, it's tiny, and the percentage has been trending lower since welfare reform 14 years ago. There is also Social Security, Medicaid, and other programs that exist to help various people that are elderly or sick. Many of these programs work in a way that the people that get the benefits paid into them during their working years. However, these programs are getting stretched due to longer life expectancies. Eventually I think the retirement age will have to be moved up. It won't be popular, but demographics will demand it.

Now, back to "wealth redistribution". This has become in the last couple decades a Republican code phrase for "the wealthy should pay lower taxes". Then once they are proposed to be cut for the wealthy, it is argued who then should pay more to make up for the shortfall, since even if the economy is stimulated by the cuts, which may or may not happen, it is unlikely to make up for the whole difference, especially in today's conditions. Conservatives will often say that the budget should be cut. There is always "waste" somewhere that can be targeted, but when you are in as big a hole as we are now, there isn't enough waste that exists to make up that kind of deficit. We generally don't want to cut the military of course, since that's vital, and not infrastructure, which we need for commerce to run smoothly, but then most of what you are left with are programs for the young, the elderly, or the sick, and remember only about one percent is really "welfare" as you and I would think of it (able to work but out of work, and/or looking for work). So, one way or another, "wealth redistribution" is a request to re-balance taxes and spending so that those that are already well off will take home more, and those that are retired, sick, or less well off will pay more and/or receive fewer services. This policy then hopes and assumes the rich will use this money to expand businesses instead of taking an extra trip to the Carribbean or buy a yacht. This is what people call "trickle down economics".

So, who should pay what in your opinion, why is it fair, and if you would pay less, who should pay more or receive less government help?

16 comments:

Rightwingsnarkle said...

Any wingnut crying 'wealth distribution' hasn't been paying attention for the last 8 years.

Wealth has indeed already been distributed. Upwards.

Then again, who expects wingnuts to actually have a handle on facts?

Anonymous said...

The concept of regressive taxation in the form of a flat tax or even a value added tax is something the right-wingers just prefer to not see.They look at teh taxes they pay to be a personal affront and that in virtually all cases should be lower. I prefer progressive taxation. I pay a healthy percentage of my income in taxes , certainly more than years ago when I was poor as dirt, but I don't mind, even a bit.I prefer the view of Oliver Wendell Holmes...'I like paying taxes. With them I purchase civilization.'

Erik Grow said...

Yes, I agree. I was trying to get them to justify the burden being adjusted downward at Sparkle's and I just kept getting general arguments about why we pay too much in taxes or how the money is yours or whatever. That's all well and good, but how that is good for America, I'm not sure.

DAVE BONES said...

I think I'm a communist.

nicnerd said...

Hmm... do well and get taxed to fund those who do not work as hard. Somehow that does not sound like capitalism to me. Should the country be legislating goodwill? I am not wealthy and I do donate both time and money to charity. I do however resent sending my money over to the gubmit to spend on social programs for the lazy and uninspired.

Erik Grow said...

We've decided as a country that we will pay for some goodwill. As I mentioned, most of this "goodwill" is not for able-bodied jobless people. In fact a tiny amount of it is! If you want to dismantle completely that apparatus, then the care for the elderly would change dramatically between a boom and a recession. I don't think we want that.

Two Dogs said...

Well, I think that I am going to be one of the 1.5 million that has to pay the penalties that Barry is demanding. Some of us are going to not only see our taxes go up exponentially, but most will see very little savings, all except those that currently pay no tax at all will get about 500 bucks CREDIT. Rates will not go down at all under a Barry plan.

Dang, some of us will have to give back the piddling tax cuts that Bush and the Republicans gave us that grew the economy. Now, Barry is actually promoting us giving that money back and spending it on more social services that reduce the economy. I have his Magic Tax Calculator linked, if you are interested. The most anyone can save is just over 3000 dollars, and that is only someone that has no tax liability already.

Typical lying Democrat, like Bill Clinton and his LARGEST TAX INCREASE EVER ON THE MIDDLE CLASS, three weeks after he was sworn in after getting elected on the cutting of middle class taxes. Democrats possess an Etch-a-Sketch for a brain.

Rightwingsnarkle said...

lazy and uninspired

Yup, that describes nicnerd, or any other wingnut for that matter. Describes 'em to a 'T.'

nicnerd said...

Look I read your impish piss and venom, snarkle and I dismiss it as mindless ranting. However, you do not know me at all. I work 10-12 hours a day, raise two children and volunteer for my community every night. What do you do?

You really never contribute much of value to a conversation. Every comment I see from you is just foul language and insults. If you have something insightful or relevant to say, please post it.

Erik Grow said...

Two Dogs, I very much doubt you are going to end up paying more. You put it in the calculator and it lied to you? I don't get it. You own your own business, right? You pull in a quarter mill a year after expenses?

Snark, nicnerd is actually a good friend of mine in real life. He's a crazy right-winger but a very good guy despite it. Hah. Not that I'm going to edit the comments over it. Just wanted you to know that by way of background.

Two Dogs said...

Erik, I know that you are old enough to remember our first black president running on a tax cut for the middle class and then crawfishing out of it a mere three weeks after being sworn in. I also showed with Barry's calcualtor on his site, that a single person that makes over 100k a year doesn't get a cut under his plan. Y'all are not listening to what the Obamessiah is saying. He is not saying that everyone that makes less than 200k a year gets a cut, he is saying that no one will pay more. Yet, math is certainly NOT his strong suit.

The one thing that he is definitely saying is that ALL tax rates will go up. ALL, not some. So, how exactly do you get those cuts? You have to qualify by having a bunch of kids and owing a bunch of money. But, do not believe me, use his website's calculator, like I did instead of shoving you head in the sandd and praising the Obamessiah.

I am asking y'all to listen and use the tools that He is giving you and still you will not do even that.

Erik Grow said...

OK I just did it, the calculator on Obama's site and it says I would get a cut of $1,300. I'm married, file jointly, and our combined income is 150K-200K. I save for retirement. Are you saying that's wrong too?

nicnerd said...

Well I just ran mine:

You will probably not get a tax cut under the Obama-Biden plan.

Strangely, the magic calculator neglects to tell me how much more I will have the privilege of paying. I am even more pleased to know that Erik with dual incomes and no kids can have some money back, whilst I finance his good fortune.

Will you take the family and I out to dinner with your $500 Erik?

Rightwingsnarkle said...

So nic the nerd sez....

impish piss and venom

That's a great phrase. Great alliteration. May I use it?

I work 10-12 hours a day, raise two children and volunteer for my community every night. What do you do?

That's very impressive.

I collect welfare checks under several different names, own a fleet of late model cadillac cars, am on 'disability' from a former union job, and spend most of my time doing business down at the liquor store (thank goodness they take food stamps).

I also like to play the various scratch tickets in several state lotteries (you can't win if you don't play).

As for volunteer work, once this election is over (voting takes me a while, since I'm registered under many different names in several states), I'll be able to get back to my passion - the National Citizen's Committee to Ban Guns. We've got some pretty plush offices, thanks to George Soros.

You really never contribute much of value to a conversation. Every comment I see from you is just foul language and insults. If you have something insightful or relevant to say, please post it.

As the watchword on my own blog makes clear, the opinions of wingnuts must be scorned and ridiculed. There's really no need to 'contribute' to a 'conversation,' since, when it comes to wingnuts, 'conversation' never even enters the picture.

As I've been trying to tell our good mutual friend, young Erik. He'll figure it out, though. I really think he will.

nicnerd said...

Again, nothing of substance. I too, can throw dung and but being ostentatious for the sake of shock is rather pointless. Please enjoy your mindless rant.

To set the record straight though, I am not a fan of John McCain, you must have me confused with RWS.

Rightwingsnarkle said...

Again, nothing of substance.

Absolutely. That's the point.