Freethought & Rationalism Archive

emphryio · 06-01-2003, 11:46 AM

I don't feel like giving the links but there's an article in the Financial Times suggesting that these tax cuts on top of the HUGE deficits Bush has already built up are designed to cause a sort of "economic catastrophe" which the republicans will use to justify further decreasing of social spending.

The thing is, right afterwards a paper from corporate think tank American Enterprise Institute was leaked that was suggesting that indeed we need to cut social spending as a result of all this (before it all has actually happened.)

It's worse than you think Ex-Idaho.

Lutnick · 06-02-2003, 09:51 AM

Quote:

Originally posted by peacenik
The benefits for social security do help out the poor more than they help out the rich, but that is only one federal program and as you know the idea that the SS payroll tax actually goes into a trust fund is a hoax anyway; it all goes into the general revenue stream. Once again Conservatives like you ignore the full picture. First you failed to address the fact that state and local taxes are regressive. Second, you point out one federal program that happens to disproportionately benefit the poor and middle class while ignoring the vast majority of government programs that benefit the wealthy including subsidies, grants, and other forms of money for R&D for major corporations, the humongous military industrial complex that benefits corporations from Boeing to Halliburton that President Eisenhower so eliquently warned us about in his last major address to the nation, K-12 public education which tends to be better funded in well-to do communities than in poor communities, subsidies for higher education(not including financial aid like Pell grants or loans, but the general subsidies that all students benefit from in the form of lower tuition bills disproportionately benefit the wealthy since a higher percentage of the wealthy send their children to College and Graduate or Professional School; don't get me wrong I thing that states should promote higher education; I just look forward to a day when everyone can send their children to college regardless of their socio-economic background). Additionally many governmental programs benefit everyone regardless of their socioeconomic status including things like the interstate highway system, the FDA, the EPA. Also you fail to acknowledge the costs that society imposes upon those with less money due to the fact that they typically have less political clout for numerous reasons. It is no accident that toxic waste dumps, landfills, and prisons typically get built in less afluent communities. Additionally, corporations are much more likely to get by with passing part of the cost of their production off in the form of POLLUTION in communities where the economic condition is poor. It's convenient for Conservatives to say that the rich get soaked by taxes and that the poor get all of the benefit from governmental programs, but the fact is that it isn't true. It's a conservative lie. We need a government that ends corporate welfare and that provides real opportunities to those who are poor, but the only way that this will ever come about is if we have a system of democracy where the politicians aren't bought and sold by special interests. A significant step toward such a government would be creating a public campaign finance system, which I proposed in this thread:

http://www.iidb.org/vbb/showthread.php?threadid=52439

Anyway, perhaps someday some of you conservatives will see the whole picture rather than the narrow worldview that has been painted for you by idiots like Rush Limbaugh, Michael Savage, George Bush, Paul Wolfowich and all of the other neo fascist bastards who just want to empower wealthy corporate businessMEN(they believe a woman's place is in the home) at the expense of the poor and downtrodden.

I think it's time to relax there, pal. I never thought correcting one misimpression would result in a tirade in which, among other things, I'm unthinkingly thrown into the same camp as Limbaugh, Savage, and the rest. Please avoid future knee-jerkism.

Lutnick · 06-02-2003, 10:00 AM

Quote:

Originally posted by ex-idaho
The system is really not very progressive at all. As it stands now a person making $50,000 annually like myself pays at the rate of 27%. A person making $350,000 annually pays at a rate of 35% At one time the highest rate in the US was 98% (WWII era). Currently the tax code in the US is the least progressive in US history.

I was talking about the PAYROLL tax, not the income tax, although the income tax is also progressive.

Your numbers are misleading. Your MARGINAL rate is 27%; the person making 350k has a MARGINAL rate of 35%. The actual spread in your respective tax burdens is significantly greater than 8% of income for numerous reasons, including the fact that the 350k guy is in the higher brackets for a much greater percentage of his income, the phasing out of deductions and credits for high income TPs, and other reasons.

Lutnick · 06-02-2003, 10:12 AM

Quote:

Originally posted by Happy Wonderer
I do not know what program you are referring to here. Social security benefits are based upon payments into the system; people making greater income (to a point) make more from the system than people with lesser income. That is not a progressive system as far as the poor are concerned and doesn't support the idea that the poor make out well on the benefits side.

If you are saying that the poor generally get more out of welfare programs than they put in, well yeah -- that is kind of the point of a welfare system. However, note that welfare benefits are reduced as the poor's income rises, so in theory it is a flat benefit; the goal is to raise everybody up to a certain minimum subsistance level. (Starvation in the streets not being considered a good thing for the image of the world's richest nation...) The benefit actually ends up being regressive due to state taxes, literally you can end up taking home less money the more money you earn, since your benefits are reduced by more than your effective take-home. (Pretty crazy, IMO.)

I think that everybody will agree that the system is screwed up from almost whatever perspective you have on it. That is nothing new. Come up with a solution and let's discuss that.

You have to note that there is a built-in regressive system to the world. For example, if you don't have medical insurance, you pay full price for any medical procedure. If you bill through insurance, procedures can be from %30 to %50 less expensive because of the negotiation between the doctor and the insurance company.

It is cheaper to be wealthy than it is to be poor!

hw

It appears that it's impossible to correct one misunderstanding without being bombarded by all sorts of completely unrelated topics.

You are simply wrong on the Social Security issue. It is PROGRESSIVE. The poor receive more in benefits as a percentage of their initial "contributions" than the rich do.

peacenik · 06-02-2003, 09:06 PM

Quote:

I think it's time to relax there, pal.

Relax?

I will not relax until Conservatism is vanquished from God's Green Earth. I will not relax until the American Dream ceases to be just merely a dream for millions of Americans. Only when the American Dream becomes a realistic possibility and realistic opportunities present themselves for even the poorest of the poor will I cease fighting the good fight for liberalism.

Happy Wonderer · 06-02-2003, 09:45 PM

Quote:

Originally posted by Lutnick
It appears that it's impossible to correct one misunderstanding without being bombarded by all sorts of completely unrelated topics.

You are simply wrong on the Social Security issue. It is PROGRESSIVE. The poor receive more in benefits as a percentage of their initial "contributions" than the rich do.

I'm confused and I readily admit that I don't know a lot about the details of the system. However, I do know that social security contributions top out at around 80K, and also that payouts are based on contributions. I get a nice little printout from the government each year showing me that. So consider a very poor person who works odd jobs here and there (say as a dishwasher and handyman.) What payouts does he get from social security, especially if he was paid in cash and the transaction was not recorded?

Does my dishwasher get more or less payout at retirement than an executive? Is there some minimum amount that everybody gets, regardless of how much they put in? If you have links I'd appreciate it, I find myself wading though lots of sites that never quite get around to telling me "if you put in X amount over Y years you get Z benefits." It seems like in theory it isn't supposed to be progressive, but in practice it may be.

Yes, in absolute terms the current retirerees are getting more money than they put in, but the money that they put in was worth more. (However, it is probably a true statement that more is going out of the system than came in, hence the problem of the system breaking down.) In general, I wouldn't consider that a 'poor' issue as many of the payees were well enough off when they were working.

The confusion here may be that I'm talking about the actual Social Security program, which is roughly a retirement account. There are other federal programs which are actually aimed at helping the poor, but I'm sure you know that.

hw

Happy Wonderer · 06-02-2003, 09:55 PM

Quote:

Originally posted by Lutnick
I was talking about the PAYROLL tax, not the income tax, although the income tax is also progressive.

Your numbers are misleading. Your MARGINAL rate is 27%; the person making 350k has a MARGINAL rate of 35%. The actual spread in your respective tax burdens is significantly greater than 8% of income for numerous reasons, including the fact that the 350k guy is in the higher brackets for a much greater percentage of his income, the phasing out of deductions and credits for high income TPs, and other reasons.

Unless, of course, the person earning 350k is making a lot of their income in stock. Then (as long as they sell the stock as long-term capital gains) they are paying only %20. A lot of the rich guys you may or may not like get most of their income from stock options in their company. Even guys that you don't know may have gotten most of their income that way.

True, if you use stock to pay the price of the option, then you pay ordinary income on the amount that you had to sell to exercise (which practically all that means is that you sell a bit more...) Holding onto the stock for two years of course has risks, but hell you didn't pay anything for it in the first place, so you win (or break even) no matter what happens.

There are even clever ways around paying ordinary income on the shares you sell to exercise, but that is way off topic.

hw

EDIT: re-reading this, I'm making it seem somewhat better than it is, because you do pay OI on the difference between the stock price you pay and fair market value of the stock. That would be taxed at your marginal rate, but there are ways to minimize that as well.

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06-01-2003, 11:46 AM	#21
emphryio Veteran Member Join Date: Oct 2001 Location: WV Posts: 4,369	I don't feel like giving the links but there's an article in the Financial Times suggesting that these tax cuts on top of the HUGE deficits Bush has already built up are designed to cause a sort of "economic catastrophe" which the republicans will use to justify further decreasing of social spending. The thing is, right afterwards a paper from corporate think tank American Enterprise Institute was leaked that was suggesting that indeed we need to cut social spending as a result of all this (before it all has actually happened.) It's worse than you think Ex-Idaho.

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