Want to pay less tax? Vote Obama!

[yesthattom]

I assure you that 100% of my friends will see a tax reduction under the Obama plan, and most of the time a bigger reduction than under McCain:

Comments

[sweh.livejournal.com]

I guess that'll depend on how you define "friend", then.

According to those numbers, I'll be better off under McCain and I know of at least one other person of your acquaintance who also would. Fortunately neither of us are arseholes and wouldn't vote for McCain (I can't vote, anyway, but wouldn't vote for McCain even if I could).

The biggest worry I have with BOTH sets of numbers is that it results in less federal income. Given the mega-massive debt the nation currently has, I'd rather see something a bit more neutral. Given that Obama's numbers will be attacked as "redistributing the wealth" adding an extra fraction of a percentage to the top 1% so the average cut is neutral and then using that extra money to help balance the budget would be even better. Once the national budget is balanced and we start seeing the debt being reduced to sane levels then the overall average cut can be negative.

Of course, that wouldn't be popular... "bread and circuses"

[yesthattom.livejournal.com]

The point is that many people say that Obama will ONLY increase taxes when the truth is that he's giving a reduction to everyone I know.

[dballing.livejournal.com]

Really? There's got to be a bunch of people @ GOOG with annual incomes > $603k, once you factor in stock-option exercises and such (capital gains suckage).

Again, like the other poster said, I'm not saying I'm going to vote for McBush, but from a straight tax-dollars perspective, he'd be better for me as well, and I almost guarantee you know at least a few people who will actually be penalized for their success under Obama's tax plan.

And personally, I find it annoying to penalize people for their success, but that's the AnarchoCapitalist in me. :-)

(but again, not annoying enough that I'd vote for McBush).

[yesthattom.livejournal.com]

I'm sure there are people like that, but not direct friends of mine (or if they are, I don't know because we don't go around bragging about that kind of thing).

You describe taxes as a way to "penalize people for their success". I'm sorry to hear that you feel that way. I feel the opposite. Taxes are the dues we pay to live in a free society. Everyone pays their share and the mega-rich people tend to use a lot more resources than others thus they should pay a higher percent. The CEO of a large company depends on a national highway system for his/her goods to be shipped around, an educational system to groom his/her employees, etc. They depend on the court system to enforce the contracts they write and to protect their intellectual property. They depend on police protection and other government services far more than other people.

100 years ago the mega-rich were in the 90% tax bracket. Now they're in the 30s or 40s. Moving them up 1 percent isn't "punishing their success". 90% would be, 80% would be. That's not what is being discussed here.

I'm glad that you are very concerned about the mega-rich even though you are not in that category. I don't think they have the same concern for you. That is very noble. Ben Stein (not just an actor, but the author of several textbooks on economics) wrote an excellent article about how Warren Buffet convinced him that the mega-rich need to pay more taxes. Read it here.

If you consider that most of the new revenue would be spent on building infrastructure (repairing bridges, highways, etc.) and other things that are long-term investments that benefit everyone, that's a significant change from the stereotypical "liberals are going to tax you and 'just give it to the poor'" line.

I live in NJ where a recent audit (after the bridge disaster in Mpls) found that 80% of our bridges were in bad shape. I assume they are on some plan where we fix the worst 1/n of all roads and bridges each year, so that about every n years everything has been touched. However, I read that we're only funding about half that. If funding increased that to 60% (or gosh, 100%?) you would get an economic benefit from the immediate construction/architecture/pm jobs that are created, but a long-term improvement as we all benefit from the infrastructure for years to come.

Bridges are just one form of infrastructure we could improve... our energy-generation infrastructure, electric infrastructure, education infrastructure, internet infrastructure, shipping infrastructure, are other ways the US could make long term improvements.

This weekend the NY Times published a big article analyzing Obamanomics. Take a read. It's worth it.

[dballing.livejournal.com]

"Taxes are the dues we pay to live in a free society."

I'm not sure I agree with this sentiment, and I certainly wouldn't call this reply "debunking" the logic of "punishing of success". You disagree that it's punishment, and that's fine, but when a person who is financially successful pays a higher percentage rate than someone who is not, and the sole decision-point for that higher percentage is "did you make more money than the other guy did?", then it is clearly a statement of fact that the higher-income person is being punished with a higher tax rate based on his success. If he had been less successful, he would paid taxes at a lower rate, plain and simple.

Now, I'll agree with you that we're not at the "oppressive" rates of some by-gone eras, and thank the Lords of Kobol for that.

I don't expect the uber-rich to be concerned with me. They should be concerned with themselves, just as I should be concerned with myself. Ultimately, it is my own responsibility in society to make sure that I am not a burden on anyone else. To ask other people to pick up the slack for me is unethical.

I say that people who use the roads should pay the taxes on the roads. People who don't use the roads shouldn't have to pay to use them.

You'll argue that people who don't use the roads "see the benefit" of those roads, via hauling of their groceries to market, etc. I say let those companies that truck goods on those roads bear that burden and pass it along to their customers. The customers who "buy local" will worry about interstate highway funds a whole lot less than people who buy groceries at Wal-Mart, for example. People will end up paying for that which they themselves, directly or indirectly, take advantage of. But a person who never drives and doesn't even have a license or a car shouldn't be asked to directly shoulder the burden of helping maintain bridges and tunnels.

I respect you a great deal, Tom, but I think you and I just have radically different views on economic policy. And it's cool, neither of us is necessarily right or wrong, per se, it's just different world-views.

I'm still going to vote for Obama, so it's all good. ;-)

[fengshui.livejournal.com]

The general reason that it makes sense for the rich to pay higher taxes is that their marginal utility of each tax dollar is lower. If you need to generate $1 of tax, taking it from someone with $1 million in income has less effect on their quality of life than taking it from someone making $45 thousand in income.

[yesthattom.livejournal.com]

I'm glad that you are voting for Obama and I shouldn't "negotiate past the close". So I won't :-)

[barking-iguana.livejournal.com]

The word punishment has a general, traditional meaning. And it has a fairly new, different meaning that those opposed to taxes use. I doubt that you are intentionally employing a misleading propaganda technique, but that's what borrowing a word with a strong meaning and using it to ostensibly mean something weaker is.

Punishment in its general sense is either something done for the purpose of changing behavior by hurting people (emotionally and/or physically). It is supposed to work by making the offending individual and/or other potential offenders fear the punishment.

That is hardly what the income ax is about. Implicitly claiming that it is feeds a very unseemly notion on the part of the rich that they are victims of our societal order, rather than among its chief beneficiaries.

[qwrrty.livejournal.com]

Thanks for posting this. It pins down exactly what bothers me about that "punishing the successful" nonsense.

[docstrange.livejournal.com]

+1 to most of that. A two-income family of RNs or union autoworkers could save more under McCain's proposed numbers up there, especially if they're still saving for a house. The real issues under both plans are indeed the deficit, the creation of undesirable economic incentives, and of course that almost no President ever gets the budget they want through Congress intact.

Also, is some of that top number estimate under Obama from his proposed increase for the long-term capital gains rate? While "the rich" do make a lot of money under LT cap gains, that rate - set under Clinton - was calculated to shift the use of excess income from consumption to capital investment. It was a major factor in planting the seeds for the tech boom. Shift UP the capital gains rate, and some domestic investment money (already a little dry) will go back to consumption and investment in hard goods, overseas shelters, or even tax-free bonds. Demand for bonds may help the interest rate on the debt, but the slowdown of seed investment will mean a slowing economy, lower tax returns, and ultimately a very peculiar recession (with domestic production down, but consumption up).

So, I don't like either plan, and I agree also on the "bread and circuses" comment - I don't just vote for whichever jerk is going to lower my taxes, Tom, and I sure hope that's not how you want people to vote, because it's ultimately a race to the bottom.

[la-directora.livejournal.com]

I don't just vote for whichever jerk is going to lower my taxes, Tom, and I sure hope that's not how you want people to vote, because it's ultimately a race to the bottom.

When I hear stuff like this during an election cycle, I never assume it means, "And therefore, based on this one point, you should decide whom your voting for." I took this as being a debunking of the language we keep hearing from the McCain campaign about how Obama doesn't care about us and is going to raise our taxes. McCain is TRYING to convince people that Obama is out to get the middle class. This graphic is just a point of refutation against that rhetoric.

[dballing.livejournal.com]

No, instead he's out to get the people who were successful and made good investments (whether those be investments in education, or investments in financial instruments). :-)

There are plenty of people, though, for whom that statement "Obama doesn't care about them and is going cost you more in taxes" is true. Anyone making over $111k/yr can say "Obama wants to tax me more heavily than McCain does" and have that be a 100% accurate statement. As docstrange and sweh pointed out, *I* could make that claim based on my income, and I'll bet good money Tom could, too (although he won't *grin*)

[la-directora.livejournal.com]

Well, call me a bleeding heart liberal, but I think the tax burden SHOULD be higher on those who have more. And, yes, I felt that way when my salary started to edge up into those higher ranks. I didn't just develop that attitude when I went back to being a starving artist. Heck, I think MY tax burden should be higher than most people in the same salary tax bracket I'm in since I'm in this lower bracket by CHOICE. But I haven't figured out how to make that work, other than making it a priority to give whatever I can to charity.

[dballing.livejournal.com]

From each according to his ability, to each according to his need ... yeah, I've heard that somewhere before. ;-)

Look, I'm not trying to get into a debate about it. The "tax the successful" doctrine is well-documented and will almost certainly get elected this term, because I think even the right is starting to ask "WTF" about the economy. I'm even going to grit my teeth and help make that happen, because there's so many WORSE things wrong with the other guy. :-)

But you won't convince me that it's good economic policy to punish people because they're smart with how they invest their assets (whether that's investing in a good education to earn a healthy income, or investing in instruments which yield high returns).

[la-directora.livejournal.com]

I am not in favor of turning our economy into a socialist or communist one, don't worry. :) Honestly, I think we could solve a LOT of these tax problems by, instead of "punishing" those who are doing better (though I don't think of it that way), finally taxing corporations like corporations instead of people.

But, as you said, I'm not interested in a debate about this either. My primary reason for responding to this post at all were the number of comments that seemed to interpret Tom's post as, "See this one data point? That's how you should make your voting decisions." Which is not how I took his post at all. I simply took it as a refutation of misleading rhetoric that keeps coming out of McCain's mouth. And I think refuting that rhetoric with *gasp* actual numbers is a good thing to be doing.

[dballing.livejournal.com]

I'm with ya on the corps.... well, ok,... In my perfect world, it's all anarcho-capitalism, and we don't need taxes, BUT, for now, I'll settle for taxing corporations a reduced amount (a much reduced amount), but on their **GROSS** not their NET. It's up to them to make a profit with what they earn, but by going after their gross, not their net, you eliminate 99% of all the crazy loopholes and hiding places for profits. It's simple. "You brought in $1B, we're taxing you 1% of that, I hope you earned enough of a profit margin to stay in business after that, otherwise, you're done."

No deductions, no nothing. Just a flat tax on the top number, not the bottom line. Makes the "corporate tax" another predictable number they should/can/will use when calculating their bottom line to their share-holders.

[docstrange.livejournal.com]

Well, Tom kind of set that tone with, "Want to pay less tax? Vote Obama!"

I have no argument with progressive tax rates, and I also would be happy to pay more if the budget is set to accomplish more. Sometimes it is, so I often vote for those who'd tax me more. Finance is hardly my only, or even my foremost interest, "What's the Matter with Kansas" be damned for missing half the big picture (might as well ask what's the matter with NYC, MA, or California - most of us think of finance as only one factor).

Anyhow, while I am in favor of progressive rates, it's not just the overall rates on the rich; it's how those percentages are constructed that matters. dballing says some of this more concisely than I am. Re-raising the cap gains rate will remove incentive from capital investment (including startup companies and R&D). Increasing the regular income tax rate on the wealthy will probably not in the long run "tax them more" but it will cause them to put more funds into long-term capital investment. Raise both and money will go into shelters and the super-rich will retreat to their country estates. That's what they did after the Depression was underway.

Clinton understood all that and lowered cap gains to stimulate whole new domestic industries - it worked very well until the Fed (across both Clinton and Bush) had the temerity to overhold inflation low, lowering its rates to the point where the incentive became very strong to create perverse forms of securities to satisfy the demand for even moderate rates of return in "safe" investments (and thus the mortgage securities fiasco). So, I don't know why Obama wants to increase cap gains rates - I think it's a terrible idea, and I've personally *maybe* made 5% of my lifetime income off long-term cap gains.

And I think it is also essential to see taxation rate-setting ultimately as a non-partisan issue with respect to just the "rates". It gets talked up every election, but the plain numbers mean so much less than the details. The largest overall tax cuts for the top percent since the 1940s have occurred under Democrats - and even then they each had very different details and consequences. Clinton understood that it's not just how much they pay, it's where they put it when they try to avoid the tax (and they will). If they put it into employee wages, that's potentially good. If they put it into R&D, that's also got good effects. If they just buy up real estate, stick it into overseas shelters, drive up tax-free bond rates, or buy yachts filled with gear made in China and Japan, that's overall not so good. Taxes always shape behavior, and using taxes to shape behavior may be one of the oldest - and most effective - ways for government to "regulate" investment and spending and ultimately shape how society as a whole experiences wealth.

I am also 100% for the personal green energy credit, and 100% against the ethanol incentives - for social/technology/energy policy reasons, but not at all for federal fiscal income or even corporate justice reasons. Those are positive side-effects, but are hardly guaranteed.

[yesthattom.livejournal.com]

No, my tone was to debunk the "Obama will raise taxes" rhetoric, not to say that he'll lower it more than McCain.

I just wrote a longer reply (above) debunking the "taxes punish success" myth.

> I don't just vote for whichever jerk is going to
> lower my taxes, Tom, and I sure hope that's not how
> you want people to vote, because it's ultimately a
> race to the bottom.

Agreed. I don't think anyone should vote based solely on one issue. There are thousands of reasons I prefer Obama.

[docstrange.livejournal.com]

Ah, OK, that's obviously not how some of us read, "Want to pay less tax? Vote Obama!" Hmm?

Like you, I also don't hold with the 'progressive taxes punish success' line (though I suppose in a way they do, but I don't think that's a realistic use of the term "punish"). I do think we have to look at more than immediate payment for value, however. Taxes change where capital goes - and trying hard to trap all capital movement with taxes ensures capital stays still (see my Great Depression comments). So I still think Obama's tax plan is one almost certain to worsen recession. I think Bill C.'s tax policy turned out pretty good, and he lowered cap gains to stimulate new research & development, and start-ups. It worked.

[qwrrty.livejournal.com]

No, my tone was to debunk the "Obama will raise taxes" rhetoric, not to say that he'll lower it more than McCain.

FYI, that's exactly how I read this post. The subject might be a little off-balance but I got what you meant. And you probably know by now that I will not hesitate to criticize you if I think you've drunk too much Kool-Aid. :-) :-)

Of course, you and I may be paying closer attention to campaign tactics than some of your readers, which probably helped me figure out the context here.

[mrfantasy.livejournal.com]

I don't think people should be punished for being successful, and I doubt the Obama plan does that. I should do a little research--I wouldn't be surpised if the tax tables are still more generous than in say the Reagan administration.

I think progressive taxation is easily justified in terms of the relative ease of accumulating wealth if you already have it (and especially since losses can be used to offset gains). If I have a million dollars, I only need a 1% return to make $10,000, but if I only make $20k a year, coming up with another $10k is much more challenging. If I'm, say, John McCain with a net worth of about $28-$45 million (http://www.opensecrets.org/pfds/CIDsummary.php?CID=N00006424&year=2006, not including his wife's assets), I won't say he wouldn't notice another half million or so being taken in taxes, but I think he'll pull through just fine. I also don't think that extra taxation will discourage him from trying to make even more money, which I have no problem with him doing as long as it's legal and ethical. (I'd love to see the people who would say, "Hey, I was gonna make another $1 million this year, but I didn't because I'd only get $700,000 of it.")


I also don't know if this graph accounts for payroll taxes, which mostly affect people making under $100k per year, and doubly affect joint filers.

[barking-iguana.livejournal.com]

A progressive tax structure is also called for because equal tax rates don't equal an equal real cost in well-being.

[catwithbell.livejournal.com]

The "tax the successful" doctrine

As my eyes glaze over reading the essays (though it could be a poor adjustment to my new lens prescription), I read that line and thought: taxing the unsuccessful wouldn't be very effective.

I should perhaps take a nap and try to parse all the finance-speke again.

[jayeye.livejournal.com]

you need to get richer friends, Tom :)

[sierra-nevada.livejournal.com]

If the capital gains tax rate increases, my effective tax rate will go up. Of course, Tom may no longer consider me a friend, since we disagree so profoundly about economics and good public policy.

[yesthattom.livejournal.com]

I still consider you a friend, dude. I am friends with plenty of people that I disagree with on economics and public policy.

[jayeye.livejournal.com]

I'd rather pay more taxes and not have a president and an administration who believe that I'm a second-class citizen (at best) or should be sent to the ovens (at worst). Of course the two are not mutually exclusive, but the other alternatives are not on the ballot.

[sierra-nevada.livejournal.com]

In the typical choice between "your money or your rights" (republicans versus democrats), I've usually opted for the former on the principle that, within limits, you can buy your rights, if you have money.

I would like nothing better than to see the return of the rule of law, ergo the public judgement and punishment of all of those who have violated the law in the past eight years. However, as members of the political class, the democrats have no more interest in legal accountability for their actions than the republicans do, so I don't expect any action on that front as a result of their collective pondering of the ancient aphorism, "there, but for the grace of God, go I." Once in power, politicians rarely, if ever, give up any of that power, no matter what they promised the electorate.

Of course, if things get bad enough, you can always vote with your feet, as refugees from bad government have done since time immemorial, whether political, ethnic, religious, or economic. The USA, despite all the flag waving, is not necessarily the best deal going on earth these days, and the political class would do well to pay attention to the comparative surveys and adjust public policy accordingly. Obama and McCain are, to a degree: they have both pledged to reduce the nominal corporate tax rate down from 35% to 25% to bring the USA in line with the rest of the world.

[mrfantasy.livejournal.com]

There's also a more pernicious part of our current governmental funding structure. The fact that we're running enormous deficits. A deficit means the government is funding its operations not solely from tax revenues, but from loans (T-bills, bonds, etc.) The people buying those bonds are 1) the US wealthy and 2) foreign interests (the Chinese, Arab states, European states, etc.) So, in the case of wealthy American citizens, instead of paying more in taxes, they're loaning the government money, which the government must pay back, by generating more tax revenues. The people who can't afford to buy government debt disproportionately bear this burden, especially since they can't personally benefit from purchasing government debt. While it's not only fine but good for the economy for the government to take on limited debt, our current situation is unsustainable, and in some ways is regressive taxation.

[tactisle.livejournal.com]

Heh. I love that "penalize success" canard. Successful people are "penalized" all the time -- we make them take jobs that bear great responsibility, we point cameras at them alla time, we make them buy private jets to avoid traffic and security guards for their estates, hell, we make some of them run the frikkin' country! How's that for punishment? ;)

But seriously... a citizen works two jobs to keep food on the table, the mortgage paid, and the possibility of a decent (read "private") high school and college in all their kids' futures, and manages to scrape by on -only- a hundred and ten grand a year, but by this definition, that's not success. Even with all that hard work you're not successful yet, to say nothing of the poor slobs at 66K! Now, if you had a twenty-percent stake in a company with ten thousand minimum-wage employees, -then- maybe you'd be successful. But until then, when we tax you higher we're punishing you for your -failure-.

It's a twisted, aristocratic view of success, and a very old-fashioned view of who should pay for the maintenance of civilization. But then again, I'm the kind of freak who gauges the morality of a society by how it treats its beggars.

[qwrrty.livejournal.com]

But then again, I'm the kind of freak who gauges the morality of a society by how it treats its beggars.

I remember once upon a time reading an essay in which a Swiss citizen (I think) who had been talking about how great his quality of life was, was asked: but isn't it frustrating and infuriating to have such an incredibly high tax rate? His answer, as best I can remember it, was: "What is the value of living in a society where everyone's health needs are tended to, where virtually no one goes sick or hungry for want of money, and where everyone who wants an education can seek one?"

[jayeye.livejournal.com]

> gauges the morality of a society by how it treats its beggars

I am lost for words. There is nothing I can possibly add to this.

[shandrew.livejournal.com]

I think i'll pay more in taxes under Obama, because the economy will be much healthier, meaning i'll be earning more money!