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Sunday, May 28, 2006

Why The Poor Should Pay More Taxes, Part II

Part I is here. A more accurate title of the first part would be: The poor receive benefit from the existence of government, too. A more accurate title for this part would be: You're only screwing the poor. These posts are in response to DovBear's post, "Why the rich should pay more taxes."

The rich do get great benefit from government, and probably more than poor people. But the top 5% of the country already pays 95% of the taxes, and it has been proven (repeatedly) that lower income taxes provide great benefit for the economy as a whole, for unemployment, for inflation, and for every single major indicator in this country. Those that gain the most are those who now *have* jobs, whose costs are low, and whose products are better and far more available than ever.

If you're seriously afraid of revolution, putting down those who are poor is not the way to guard against it. Essentially saying, "Here, take this, be a good boy" is demeaning and disgusting. The best way to guard against social upheaval is to make available to everyone the opportunity to succeed.

People don't like being on welfare. People don't like standing in an unemployment line. People don't like handouts. It's degrading. Sure, people aren't generally stupid, either: And if they qualify for WIC, they'll take it. If they qualify for unemployment, they'll take that, too. And if they can get a tax break or an earned income tax credit, you better bet they're going to put it down.

But people aren't interested in being poor. Stop throwing pennies at them to keep them from earning dollars. Give them the means to earn real money, by providing greater - fair - opportunities for employment. Give them the means to save money by allowing companies to invest in R&D which in turn allows them to create goods for less, making it cost less for those who need it. Give the means to invest money on their own instead of being forced to put it in Social Security, where it earns an average of 1.7% a year - when Treasury Bills earn 4%.

Stop trying to screw the rich - the only ones who get screwed are the poor.

12 comments:

  1. it has been proven (repeatedly) that lower income taxes provide great benefit for the economy as a whole, for unemployment, for inflation, and for every single major indicator in this country

    So there should be no income tax at all? Surely there must be some number which is optimal. What is that number? How do you know we're at or above it?

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  2. No, I specifically wrote lower. Clearly, we're not below that number yet, because of how the economy has responded to Bush's tax cuts. Are we at it? Possibly. Are we above it? Possibly. Are we *way* above it? I don't think so, seeing as how there are far less complaints from businesses and the like at this point. Granted, they may simply be happy with the current changes, but I can't imagine that the threshold should be incredibly lower.

    Clearly, though, that break point is not higher than the current setup.

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  3. Clearly, we're not below that number yet, because of how the economy has responded to Bush's tax cuts.

    Are you really one of those people who thinks the deficit doesn't matter? Bush is mortgaging our future to keep the economy afloat after giving tax cuts for the filthy rich and spending wildly. Of course the economy will do well in the short term as long as we keep borrowing. I can have a hell of a time using my credit cards until it finally comes back to haunt me as well.

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  4. That has nothing to do with the tax cuts! Look at the numbers: Tax revenues are soaring. That Bush spends irresponsibly is a (very good) separate discussion. What's incredible, and somewhat annoying, is that the deficit is slowing (or even shrinking by some estimates) despite the spending, because of the tax revenues. I say annoying because it gives Bush an excuse to not control spending, which I feel is the worst part of his tenure so far.

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  5. I'm going to judge this long before I read it, based only on its title.

    And with that, I can surmise that you are a horrible, heartless person.

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  6. S'ok. As long as you *do* end up reading at least the first 3 words in Part I.

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  7. [oh, and I know Robbie was kidding]

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  8. people may not wnt to be poor..but if you it is to people's economic benifiet to not work, wy would thye work, especially if they are not high achievers?

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  9. I'm not sure what you mean. Many people purposely don't work because they would lose out overall.

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  10. 'the deficit is slowing (or even shrinking by some estimates) despite the spending, because of the tax revenues'

    The tax revenues are increasing because the tax structure is still progressive -- as people get pushed into higher tax brackets they pay a higher tax rate. Similarly, as more and more folks become liable for alternative minimum tax, revenues increase.

    'And if they qualify for WIC, they'll take it. If they qualify for unemployment, they'll take that, too. And if they can get a tax break or an earned income tax credit, you better bet they're going to put it down.'

    First, remember that WIC is a program of the Department of *Agriculture*, not of the Department of Health and Human Services. So is the Food Stamp program. The real purpose is not to feed poor people but to increase the market for agricultural commodities. They are thus really welfare programs for farmers (as is the Northeast Dairy Compact).

    Regarding the Earned Income Tax Credit, which is a form of negative income tax, conservative economists generally agree that it is the best form of welfare program in terms of helping the poor. It doesn't limit their choices. But it would be politically impossible to replace things like WIC and food stamps with an expanded EITC. The agribusiness lobbyists would not stand for it. And in America we like government to be paternalistic and tell people how to spend their money.

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  11. the top 5% of the country already pays 95% of the taxes

    Ezzie,

    Your numbers are way off.

    The top 1% pay 34%.

    The top 5% pay 54%.

    The top 10% pay 66%.

    The top 25% pay 84%.

    The top 50% pay 97%.

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  12. Jewish Atheist,

    Ezzie is exactly right that the deficit has nothing to do with taxes and everything to do with spending. You fix it on THAT side of the fiscal ledger.

    However, while the deficit is not affected by taxes, three very important problems are:

    (1) a disastrous rate of national savings,

    (2) a non-ending trade imbalance, and

    (3) a declining rate of investment.

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