Let's discuss the minimum wage

engineer, no matter how many times it is pointed out that artificial manipulation of a free market often accomplishes the opposite effect that is desired, some people continue to insist upon looking at an issue in the same very shallow manner and suggesting hey, people need more money, set an artificial minimum. We have had enough experience now with observation and tracking of free markets to hopefully realize that artificial manipulation is not always helpful, but we keep having to deal with people that just don't have faith in it.

And even many so-called economists continue to fall back on their hope to be able to manipulate the natural force of free markets, because if they simply followed it, there would not be much for them to do or figure out in terms of devising artificial manipulation and working on their schemes, which makes them feel more important and smarter.

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okie wrote:

I am presuming it is included here from your quote?

Correct.

Okie wrote:

We already have higher tax rates for people that make more money, although you probably wish to raise the rates higher, I'm not sure how much?

For starters, I'd revive the 39% tax bracket that Bush II has abolished. If Congress wants to take it further and raise the rate in that bracket to 45 or even 50%, I'm not going to shed any tears over it. Beyond this, I'm getting uncomfortable.

Okie wrote:

Here, you enter the debate over whether even higher tax rates actually increase revenues, or increase revenues as much as predicted.

No we don't. At post-Carter tax rates (28-50%), serious economists are having no debate for us to enter. As Paul Krugman correctly states in Advocate's article, the prevailing effect of a tax hike at this rate is that rich people pay higher taxes. The prevailing effect of a tax cut is that rich people pay less. At the tax rates America had from Reagan on, there is no serious disagreement about this among economists.

okie wrote:

They might somewhat, but you must also deal with reduced economic activity as a result of those tax policies.

No problem. I'm willing to deal with as much reduction in economic activity as we saw when Clinton cranked up the income tax rate in the mid 90s.

okie wrote:

Are you assuming a zero sum game here?

No I don't. As even liberal economists like Krugman acknowledge, taxes discourage whatever activity they're raised on. Consequently, I believe the income tax discourages working and saving, and that the transfer of income from rich to poor will be a negative-sum game if measured in dollars. But I also believe, as do even conservative economists like Mankiw, that the marginal dollar is many times as useful to poor people as to rich. Therefore, although the transfer will be a negative-sum game in terms of dollars, I expect it to be a positive sum game in terms of utility. That makes the income worth transferring.

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Thomas, the percentage of people in the U.S. paying no income tax at all is climbing. And this effect I think is due to increasing deductions at the bottom of the scale. You cannot characterize the Bush tax policy as being unfair to the poor. The highest marginal tax rates are not as high as you might prefer but it isn't because Bush is taxing the poor to replace the revenue that you imagine might be available. I say, imagine, because not everyone agrees that higher rates will increase revenues.

And at what income would you place the higher tax rate?

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okie wrote:

Thomas, the percentage of people in the U.S. paying no income tax at all is climbing. And this effect I think is due to increasing deductions at the bottom of the scale. You cannot characterize the Bush tax policy as being unfair to the poor. The highest marginal tax rates are not as high as you might prefer but it isn't because Bush is taxing the poor to replace the revenue that you imagine might be available. I say, imagine, because not everyone agrees that higher rates will increase revenues.

And at what income would you place the higher tax rate?

The effect you notice is due to the monetary wealth being concentrated even more so in the hands of the very wealthy; deductions on the bottom of the scale have not increased significantly in a long time, but upper-end wealth has, most handsomely.

When you can make a certain amount of money by taxing 40% of our population who is poor, and it will heavily impact their daily lives, or you can tax 1% who are rich, and it won't impact their daily lives one bit, it's not hard to figure out the smart course of action.

And, you're wrong - everyone does agree that higher rates will increase revenues. There's no question that raising rates increases revenues.

Cycloptichorn

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I'm willing to raise rates on the very high numbers, but I am against raising them on the rest of us. And I doubt your politicians have the guts or the stupidity to raise them drastically, because although they say it would have no negative effects, they privately know it is highly risky and might send the economy into a tailspin.

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okie wrote:

You cannot characterize the Bush tax policy as being unfair to the poor.

Watch me!

okie wrote:

The highest marginal tax rates are not as high as you might prefer

You're putting words into my mouth. Higher tax rates aren't something I prefer; they're just a price I'm willing to pay for increased tax subsidies to the working poor.

okie wrote:

but it isn't because Bush is taxing the poor

You're putting words into my mouth again. I never said Bush is taxing the poor. In an honest debate, okie, you only get to decide what your own position is. You don't get to decide what your opponents' positions are, no matter how much easier that makes it to argue against them. That's why I'm always so quickly losing interest in debating you, okie. You can't defend your politics on their own merits, so you make up strawmen.

See you later.

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Fine, Thomas, take your bat and go home if you can't bat all the time, but I wish you wouldn't.....

Thomas wrote:

okie wrote:
You cannot characterize the Bush tax policy as being unfair to the poor.

Watch me!

Okay, I am.

Quote:

okie wrote:
The highest marginal tax rates are not as high as you might prefer

You're putting words into my mouth. Higher tax rates aren't something I prefer; they're just a price I'm willing to pay for increased tax subsidies to the working poor.

Fine, you are willing to pay, so you prefer that solution over other solutions, good grief, whats your problem today, Thomas?

Quote:

okie wrote:
but it isn't because Bush is taxing the poor

You're putting words into my mouth again. I never said Bush is taxing the poor. In an honest debate, okie, you only get to decide what your own position is. You don't get to decide what your opponents' positions are, no matter how much easier that makes it to argue against them. That's why I'm always so quickly losing interest in debating you, okie. You can't defend your politics on their own merits, so you make up strawmen.

See you later.

My apologies, but that is the drift I get here that the poor are being punished by Bush.

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Cycloptichorn wrote:

And, you're wrong - everyone does agree that higher rates will increase revenues.

Small correction: not "everyone", but everyone who has actually researched the economics of it, and isn't paid to misrepresent the state of the science. I suspect this distinction makes the major difference between okie on the one hand and Cyclops and me on the other.

Everyone who doubts it is invited to search for the relevant keywords on Google Scholar, and to see what remains after throwing out think tank publications.

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Well, Thomas, fair enough, here we are in regard to the Laffer curve again. As I have pointed out numerous times, I actually do think our rates are still slightly below the peak, so we can probably raise rates and get away with it, however, I think we are at a spot on the curve where the rise in revenue will moderate toward the flattened out portion, so that raising rates will not accomplish as much as desired, and whether it raises more revenue or not, it will still dampen the economy. If they insist on raising rates, I would rather see it on just the very very high incomes, and I would rather see a cut in spending, which won't happen.

You are the man studied up on economics, I am just an okie. But I don't think economics is rocket science and I do have a minor in math, for whatever thats worth. Have a nice day.

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okie wrote:

and I would rather see a cut in spending, which won't happen.

I guess not as we have already spent 1/2 trillion on Iraq and will spend at least another half trillion.

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Roxxxanne wrote:

okie wrote:
and I would rather see a cut in spending, which won't happen.

I guess not as we have already spent 1/2 trillion on Iraq and will spend at least another half trillion.

Ah yes, but, that was not in the budget, it was, and continues to be "supplemental appropriations." what was in the budget was all the graft and greed of republicans ear-marking.
Interesting that "tax and spend democrats" became "spend and spend republicans"

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The war IS a tax. It all has to be paid for, and currently, absolutely none of it is being paid for - it's all on loan.

The war in Iraq represents the biggest tax increase in American history... by the time we pay it off, if we ever do, it will have ballooned in cost to many trillions of dollars.

Cycloptichorn

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okie wrote:

... You cannot characterize the Bush tax policy as being unfair to the poor. ...

Sure I can. The current tax policy doesn't pay for all of our bills. Bush made three major tax reductions to put us back into deficit spending. (I understand the idea of supporting the economy and then reaping the benefit later, but there is clearly excess cash in the equity markets, so I can't see that we are benefiting from the added stimulus.) The tax benefits have been felt somewhat on the low end, but the benefit on the high end is pretty dramatic. As a percentage of income, someone making $500k/yr pays a lower percentage than someone making $100k/yr (due to FICA cutting off after the high 90's.) I've been a beneficiary of those tax cuts to some extent, but for me, it just means more to invest. Giving me big tax cuts really doesn't change my life at all. Either save it for the low end of the spectrum or balance the budget. Using deficit spending to give the high end of the salary spectrum more doesn't make sense.

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DrewDad, I must really compliment you. This thread has gone on a while and with the exception of a couple of uncalled for jabs at Okie has been very civil. What's your secret?

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A featatured thred like this
A featured thread like this should draw the attlention of all .
UNFORTUNATELY the people who visit this forum are afraid of .

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engineer wrote:

.... As a percentage of income, someone making $500k/yr pays a lower percentage than someone making $100k/yr (due to FICA cutting off after the high 90's.) ...

If you classify FICA as a tax instead of a mandatory supplemental retirement program, you have a point. Essentially it is a tax, and is treated as revenue by the government as if it was income tax. All they do is a little bookkeeping on a piece of paper. The dirty little secret that nobody talks about is the FICA tax, that hits most lower income people harder than income tax, and is especially stiff if you are self employed and make near the maximum amount taxed.

To be fair in your post, the guy that earns 100k receives just as high of a Social Security check upon retirement as the guy that earns 500k, by virtue of paying in as much tax prior to retirement. Bush tried to make Social Security become a better investment for people that pay into it, but Democrats said, no way, 2% or so on your money is fine even though almost every other investment pays at least twice that.

There is talk of simply combining the income tax and FICA, but I think that is a big mistake, because as it is, people accept the idea of paying the FICA with the hope of receiving their money later. If that distinction is blurred further, there will be calls for low income people to pay nothing, which further disenfranchises them from helping to pay their own way.

engineer wrote:

DrewDad, I must really compliment you. This thread has gone on a while and with the exception of a couple of uncalled for jabs at Okie has been very civil. What's your secret?

I am becoming used to uncalled for jabs, engineer. And I also am a bit surprised at Drew Dad that seemed to start this whole thing out by saying the minimum wage was not something all that great or beneficial, which is almost heresy for liberals thinking.

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engineer wrote:

okie wrote:
... You cannot characterize the Bush tax policy as being unfair to the poor. ...

Sure I can. The current tax policy doesn't pay for all of our bills. Bush made three major tax reductions to put us back into deficit spending. (I understand the idea of supporting the economy and then reaping the benefit later, but there is clearly excess cash in the equity markets, so I can't see that we are benefiting from the added stimulus.) The tax benefits have been felt somewhat on the low end, but the benefit on the high end is pretty dramatic. As a percentage of income, someone making $500k/yr pays a lower percentage than someone making $100k/yr (due to FICA cutting off after the high 90's.) I've been a beneficiary of those tax cuts to some extent, but for me, it just means more to invest. Giving me big tax cuts really doesn't change my life at all. Either save it for the low end of the spectrum or balance the budget. Using deficit spending to give the high end of the salary spectrum more doesn't make sense.

To address another point you bring up that I forgot, there was a recession beginning just prior to Bush taking office, and 911 really affected business for a year or two. At least some businesses. People quit traveling for one thing, and generally people sort of stayed home and went a bit dormant for a while. The dot.com bubble had to readjust itself to reality in the market and in the economy. Many people I've talked to in the construction industry indicated that people were building homes and cabins in the mountains with "monopoly" money, and when the stock market slowed down, which it had to regardless of the president, a recession was inevitable.

Secondly, can you actually demonstrate that tax revenues would have been better given no tax cuts? I think this is only an opinion, and we know tax revenues are growing now and shrinking the deficit more than predicted a couple three years ago. I think the Bush tax cuts lessened the severity of the recession and brought things back.

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okie wrote:

engineer wrote:
okie wrote:
... You cannot characterize the Bush tax policy as being unfair to the poor. ...

Sure I can. The current tax policy doesn't pay for all of our bills. Bush made three major tax reductions to put us back into deficit spending. (I understand the idea of supporting the economy and then reaping the benefit later, but there is clearly excess cash in the equity markets, so I can't see that we are benefiting from the added stimulus.) The tax benefits have been felt somewhat on the low end, but the benefit on the high end is pretty dramatic. As a percentage of income, someone making $500k/yr pays a lower percentage than someone making $100k/yr (due to FICA cutting off after the high 90's.) I've been a beneficiary of those tax cuts to some extent, but for me, it just means more to invest. Giving me big tax cuts really doesn't change my life at all. Either save it for the low end of the spectrum or balance the budget. Using deficit spending to give the high end of the salary spectrum more doesn't make sense.

To address another point you bring up that I forgot, there was a recession beginning just prior to Bush taking office, and 911 really affected business for a year or two. At least some businesses. People quit traveling for one thing, and generally people sort of stayed home and went a bit dormant for a while. Secondly, can you actually demonstrate that tax revenues would have been better given no tax cuts? I think this is only an opinion, and we know tax revenues are growing now and shrinking the deficit more than predicted a couple three years ago.

No sweat.

Quote:

Rob Portman, now the former director of the Office of Management and Budget, followed the script last week when he said, "As we look ahead, we are going to be promoting and ensuring that the tax relief stays in place, that we not have tax increases, which would jeopardize this economic growth; therefore, revenues; therefore, the good progress we've made on the budget deficit."

But you know the story; these are words the Bush administration has repeated faithfully since it took office. Tax cuts work because they make the economy better and, therefore, make the deficit smaller.

These phrases are designed to create the illusion that tax cuts have magic properties. Those of us who don't believe are muggles, our noses stuck in some book (must be because we've lost our wands).

It's time to bury make-believe economics; the fiction about tax cuts impedes the adult conversation our nation needs to have about federal taxes, spending and demographics.

Here is a news flash: The federal budget would have been balanced this year (and the next four years) without the tax cuts. The numbers are in and the Bush tax cuts did not pay for themselves in any way, shape or form.

In a letter to House Budget Committee Chairman John Spratt, D-S.C., Peter Orszag, director of the Congressional Budget Office, estimates that the "short term effects" of the tax cuts "have largely dissipated by now and the supply-side effects of those policies are uncertain but are probably small."

Let's assume that the tax cuts contributed to the economy -- at least at first. But what did they do to the federal budget?

"The net result," Orszag writes, is a cost of "roughly $195 billion to $215 billion in 2007." That's a conservative estimate. The Joint Committee on Taxation figures the total cost at more than $200 billion in 2007.

CBO estimates that the 2007 deficit will run between $150 billion and $200 billion.

The math is clear. We could have a balanced budget now, except we borrowed more money to pay for the tax cuts.

In testimony before the committee, Orszag said there is evidence that you can offset some of the costs of tax cuts. "But a full offset," he said, "That is, the notion that tax cuts pay for themselves -- is not supported by serious analytical work."

The tax cut magic show is a diversion. It hides the real bad news: The federal government needs more revenue. In raw dollars, the treasury continues to grow, but as a share of the economy, the government collects less now than it did in 2000.

http://seattlepi.nwsource.com/opinion/326303_trahant05.html

Look, it's pretty easy to look and say 'we don't have xx amount of money due to the tax cuts.' In this case, it's hundreds of billions of dollars.

It's pretty difficult for you to point out, specifically, which part of the economy grew thanks to the tax cuts. I think the body of evidence lies almost entirely on the side of those who actually have it, instead of just a theory - and a theory which never will have any actual data to back it up.

Cycloptichorn

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btw, the deficit is not shrinking; you aren't counting the Iraq war or the stealing of monies from Social Security. Big no-no from an accounting standpoint, merely ignoring large amounts of money b/c they are inconvenient to your narrative.

Cycloptichorn

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Cyclops, there is no way to know what the economy and tax revenues would have done, given the exact same period with a different tax rate because there is no way to rerun the same time period given a different tax rate. There are too many other factors to overlay upon the events, which affect the outcome.

And if you didn't count the FICA, did Clinton balance the budget? The only thing helping us now is FICA revenues exceed FICA outgo.

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Let's discuss the minimum wage

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