RSS Feed MenuFrom Politico this morning:
House Speaker Nancy Pelosi told Politico in an interview that she wants to soften a proposed surcharge on the wealthy so that it applies only to families that make $1 million or more. The change could help mollify the conservative Democrats who expect to have a tough time selling the package back home. Their support is the single biggest key to meeting the speaker’s goal of having health care reform pass the House by the August recess. The bill now moving through the House would raise taxes for individuals with annual adjusted gross incomes of $280,000, or families that make $350,000 or more. ‘I’d like it to go higher than it is,’ Pelosi said Friday.
The speaker would like the trigger raised to $500,000 for individuals and $1 million for families, ’so it’s a millionaire’s tax,’ she said. ‘When someone hears, ‘2,’ they think, ‘Oh, I could be there,’ because they don’t know the $280,000 is for one person. It sounds like you’re in the neighborhood. So I just want to remove all doubt. You hear ‘$500,000 a year,’ you think, ‘My God, that’s not me.’
Of course by raising the surtax to the $500,000 level, Pelosi also ensures that a tax that was never going to raise much revenue now raises even less. So what precisely is the point of it?
Democrats will high-mindedly speak of the “common good,” and the need for all of us to take care of each other. In their actual political behavior, however, Democrats exhibit no such romanticism. They recognize that the typical voter approaches politics a great deal more in the spirit of “what can I get?” than in the spirit of “what can I give?” Instead of appealing for sacrifices from all to all, they look for interest groups they can strip in order to support transfers to interest groups they favor. The art of their politics is to select their victims carefully, isolate them minutely, and then exploit them remorselessly.
This approach has only one weakness: Its arithmetic is unsound. The money raised by a surtax on individuals earning more than $500,000 would barely even be noticed in the balance sheet of an Obama health program. The mulcting will achieve nothing. Why do it? The answer was given by Friedrich Hayek three-quarters of a century ago: the mulcting is not the means to an end. It is the end in itself.
midcon // Jul 20, 2009 at 12:31 pm
David,
According to the IRS (2006) figures, 354,093 returns had AGI greater than $1M. At a surtax rate of 1% the total tax would be north of $3.5M (if all those returns had an AGI of just $1M). That is indeed chump change. Still, it is good politics because who is going to have an empathy for those making more than $1M per year. Of course if it is good politics to only pick on those taxpayers, it is also good politics not to make a big deal of it because most of the electorate will feel no such sympathy.
Note, it is not an issue about right or wrong or whether it makes sense. Politically it’s a no lose approach for the liberals and a no win situation for the conservatives. You can make a lot of noise about it but most people just won’t care and you will simply reinforce their opinion regarding the GOP as the party of the rich. Additionally, if you point out that it doesn’t amount to much might be an excuse to lower the threshold to something that does make a difference – which would affect a greater number of people. Better to take a pass on this particular battle.
barker13 // Jul 20, 2009 at 12:42 pm
Re: Midcon // Jul 20, 2009 at 12:31 pm –
“…it is good politics…”
Jeez, Mid… I hope you’re wrong. I mean I really do. I desperately want to think better of my fellow citizens than your perception of them allows me to.
“Note, it is not an issue about right or wrong or whether it makes sense.”
I have to disagree. Pelosi is WRONG, plus… her plan makes no SENSE (economically speaking).
Politically it’s a no lose approach for the liberals…
I disagree. I believe such blatant class warfare serves to turn moderates away from “liberalism” as practiced by the Pelosi’s of the Democratic Party. We’ll see… we’ll see in 2010… we’ll see again in 2012.
“…a no win situation for the conservatives.”
Well, I acknowledged that conservatives are boxed in to a certain extent by the MSM which still exerts a degree of muscle in the political arena, but if conservatives stick to a principled – as well as practical – disagreement with Pelosi and the Dems I believe they’ll (we’ll) get the better of this debate’s fall out.
“Better to take a pass on this particular battle.”
Hmm… we disagree. But here’s a compromise suggestion: How’bout we simply ask Charlie Rangel to pay his taxes? That should close this year’s deficit… repay the nation debt…
(*CHUCKLE*) OK, so every once in awhile I just can’t resist…
(*WINK*)
BILL
midcon // Jul 20, 2009 at 1:33 pm
Barker,
Can you imagine where you are giving speaches and appearing on TV where you are telling people who are just getting by, that they ought to cry out against taking a few bucks from some of the millionaires – such as the Goldman Sachs employees? Heh heh. That would go over like a lead balloon. Yours and my principles are wonderful things, but imagine about you standing up in a town square fighting for the “rich” guys. Remember, it’s not about reality, only perception. This is a no-brainer for the GOP. If there is a surtax and the threshold is $1M, keep your mouth shut. This is a non-starter. I think you need pull out your copy of Don Quixote and read the parts about tilting at windmills. Hey, I love your principles but the last time I was at Starbucks, I couldn’t even get a latte for mine. I had to give them real money.
ottovbvs // Jul 20, 2009 at 1:42 pm
……David, as all conservatives spinners always do, bypasses the question of effective tax rates in calculating the tax take from the ultra rich which I’ll defines as those with incomes over $1million…….This group over the last eight years have corralled the largest share of the national income since late 20’s……..I can’t remember the exact figure without checking but it’s certainly in the high teens and maybe in the low twenties…….the notion that a surtax of I actually think the figure is 3% not 1% would not generate a huge amount of revenue is wrong surely. Rangel’s bill estimates the total collection is around $350 billion so I’m not sure where you get idea this is revenue neutral…….And midcon is surely correct on the politics
barker13 // Jul 20, 2009 at 2:13 pm
Re: Midcon // Jul 20, 2009 at 1:33 pm –
“Can you imagine where you are giving speaches and appearing on TV where you are telling people who are just getting by, that they ought to cry out against taking a few bucks from some of the millionaires – such as the Goldman Sachs employees?”
Yeah. I can. Easily. (*SHRUG*)
Mid. You’ve gotta undertand… I’m comfortable being right. (*GRIN*)
Seriously… you’re talking to a guy who has been decrying the “Hedge Fund Millionaires/Billionaires Loophole” for years. (Hey… the Dems still haven’t plugged that – have they?) (*SMIRK*)
Seriously… I’d explain how much the rich actually pay in taxes, what percentage of federal income tax they’re responsible for providing; I’d approach it not from the angle of decrying progressivity per se, but from the standpoint that once someone has paid his or her “fair share” according to “the rules,” they shouldn’t be slammed with a “surcharge” based on “they can afford it.”
I believe most Americans – the vast majority in fact – instinctively would yield to such an argument. Americans aren’t big on “surcharges.” Americans don’t like when government tries to call taxes “fees” in order to avoid being seen as responsible for taxes beyond a certain point.
I especially believe that the average American INSTINCTIVELY recoils against the concept of government(s) taking more than 50% of ANYONE’S earnings. And, yeah, Americans understand that even if taxes/fees/surcharges are accessed separately from different federal/state/county/local sources… over 50% is still over 50%.
“…imagine about you standing up in a town square fighting for the “rich” guys.”
(*GRIN*) Actually, Mid, I don’t have to “imagine.” I’ve done so. I do so. Live. In person. As a member of a hostile crowd. MANY TIMES!
“…it’s not about reality, only perception.”
Then you change perception. (*SHRUG*)
“This is a no-brainer for the GOP. If there is a surtax and the threshold is $1M, keep your mouth shut.”
Well – with respect – apparently it’s NOT a “no brainer” since you and I disagree and both of us are fairly bright guys. (*GRIN*)
“I think you need pull out your copy of Don Quixote and read the parts about tilting at windmills.”
And I think you need to think hard about what I’ve written here and reconsider whether your absolute cynicism might not be… er… just a hair too cynical. (*CHUCKLE*)
“Hey, I love your principles…”
And I sincerely appreciate that. And, yes, I accept that you’re sincere in your belief that I’m wrong. All I’m asking is that you at least consider – reconsider – whether I might NOT be wrong.
Re: Ottovbvs // Jul 20, 2009 at 1:42 pm –
“And midcon is surely correct on the politics…”
Now, Mid… (*SMILE*)… if THAT doesn’t shake your self-confidence nothing will!
(*GRIN*)
BILL
ottovbvs // Jul 20, 2009 at 2:46 pm
………Some more info for those suffering from Fact Aversion Trauma (FAT) on the difference between
top “marginal” income tax rates and total “effective” tax rates. The marginal income tax rate is what applies to your last dollar of of wage income. The total effective rate is what you pay on the average dollar of any income. Marginal rates matter, of course. But they also kick in at different levels and are offset by a variety of other policies. The total effective rate gives you a much, much better sense of how the government nibbles away at your earnings. (For a quick example of how easy it is to be mislead people by talking about marginal rates: the top rate in the 1950’s was higher than 90% and Frank Sinatra wasn’t paying 90% of his income in taxes!)
Why is there such a difference between effective and marginal rates? One reason is that we tax capital gains and dividends at a lower rate than wage income. (This is why, for example, Warren Buffett complains that his secretary taxes at a higher effective rate than he does: so much of his income is from dividends and capital gains.) It’s also why, when you look at the distribution of effective rates over the last 15 years, the tax system looks a lot less progressive (excuse me, socialist) than it otherwise would.
Top effective rates for years:
1995-36%
1997-33.5%
2000-32.9%
2003-31.5%
2006-31.25%
It gets even more interesting when you look at the distribution of effective tax rates by income percentiles. These were the “effective” tax rates in 2007 by percentile:
Bottom 20%…..18.7%
Next 20%………22.3%
Middle 20%……27.0%
Next 20%………30.5%
Next 10%………31.5%
Next 5%………..32.2%
Next 4%………..32.1%
Top 1%…………30.9%
……So the odds are David’s “effective” tax rate is actually slightly higher than that of Donald Trump and Barbra Streisand, and mine is marginally higher than David’s …….Sorry I can shed no tears for the huge increase that The Donald will be be required to pay because the odds are that even with surcharges, lapsed tax cuts in 2010 and all, his top effective rate isn’t going to be very different than it was in 1996…….BTW David it would be great to import graphs
midcon // Jul 20, 2009 at 3:29 pm
barker,
Look, I am all for people paying their fair share – after all I am a flat taxer. If you make a buck the government get’s a piece of the action. No deducations, no sniveling and whining. You got troubles, I got troubles, we all got troubles. If you want the flat tax rate to be 20% or 30% whatever everybody pays the same rate for every dollar you earn (including hedge fund managers). That’s the only fair system. People who make more pay more but it’s not progressive and no one is getting stiffed.
but you said “I especially believe that the average American INSTINCTIVELY recoils against the concept of government(s) taking more than 50% of ANYONE’S earnings.” And I am asserting that you are mistaken in that belief, because the AVERAGE American (at least the ones I’ve talked to) could care less. Warren Buffet lost $50 Billion dollars (based on publish Bershire Hathaway numbers released in Feb 2009). I don’t care, you don’t care, Otto doesn’t care. Heck even Warren probably doesn’t care that much. Yeah, sure he is an extreme example. Still, the average American is just not going to get excited about people who are pretty well off getting hit with a few more dollars. I cannot even imagine how we could get them to care. Perhaps if we demonstrated the impact of those additional taxes to the average American (how it affects them) you may be able to make your case.
I’m just being a realist and you are just being principlist.
barker13 // Jul 20, 2009 at 3:52 pm
Re: Midcon // Jul 20, 2009 at 3:29 pm –
“I’m just being a realist…”
No to belabor the point, but no, that’s not how I see it.
Mid. Follow me. Accept I’m being sincere because… well… I am being sincere.
I sincerely believe what I wrote. I sincerely believe it’s REALISTIC to believe that an argument based upon the principles and yes the actual proposals I’ve given on how to frame such an argument would win out over the Pelosi/Obama brand of class warfare.
“I am a flat taxer.”
As am I… but that’s besides the point. I’ve already indicated – spelled out in my 2:13 pm post (see: “I’d approach it not from the angle of decrying progressivity per se…”) that I’m not confusing being against a million’s surcharge with being against millionaire’s paying more.
(*SHRUG*)
Now. I understand that you disagree with me over whether the average American instinctively recoils against the concept of government(s) taking more than 50% of ANYONE’S income.
We’ll have to agree to disagree. (And, hey… if you can find any authoritative polling data which DIRECTLY addresses this question as I phrased the question I’d be more than willing to “shuffle” it in to my thinking and perhaps change my mind.) (*SHRUG*)
“Warren Buffet lost $50 Billion dollars (based on publish Bershire Hathaway numbers released in Feb 2009). I don’t care, you don’t care…”
What’s that have to do with anything…??? That has NOTHING to do with what I’ve been saying. Absolutely NO connection whatsoever. (*SHRUG*)
Heck… sticking with your example I’ll go you one better. I wouldn’t be surprised if most folks get jealous and perhaps even resentful when Buffett makes $50 billion and these same folks get gleeful when Buffett loses $50 billion. Again… so what? That has nothing to do with the issue of SURCHARGES or the issue of government(s) taking over 50% of a man’s (or woman’s) legal, fair and square earnings.
“…Otto doesn’t care.”
(*SNORT*) (Fill in the blank…) (*HUGE FRIGG’N GRIN*)
“…the average American is just not going to get excited about people who are pretty well off getting hit with a few more dollars.”
Again. It all depends upon HOW the “well off” are being hit. (Jeez… I’ve finally met someone more cynical than I!) (*WINK*)
“I cannot even imagine…”
I know. I’m trying to get you to imagine. I’m failing. (*GRIN*)
Anyway… as is often the case… we’re alone here trying to have an intelligent discussion. Perhaps one of us should throw out the word *ABORTION* just to see if we can attract a crowd.
(*CHUCKLE*)
BILL
ottovbvs // Jul 20, 2009 at 3:53 pm
midcon // Jul 20, 2009 at 3:29 pm
“but you said “I especially believe that the average American INSTINCTIVELY recoils against the concept of government(s) taking more than 50% of ANYONE’S earnings.”
…………..Leaving aside the fact that this statement is based on zippo other than the personal prejudices of a FAT sufferer…….In fact as I outlined above, the govt isn’t a taking anything remotely like 50% of anyone’s earnings…..at the moment they are taking about 31% of the richest people’s earnings and conceiveably this could rise to about 36 or 37% over the next three years ………hardly enough to necessitate The Donald parting with his yacht.
midcon // Jul 20, 2009 at 4:12 pm
I’m glad you asked, here is a link, http://www.pollingreport.com/budget.htm
Now scroll for bit until you get to the following: “As I read off some different groups, please tell me if you think they are paying their fair share in federal taxes, paying too much, or paying too little.”
It’s from Gallup Poll. Look at what it says about what people think regarding who is paying their fair share. It hasn’t changed much since 1992.
midcon // Jul 20, 2009 at 4:24 pm
I’m not sure if I am being cynical, but I have become a decent judge of human behavior over the years. The Buffet comment was simply to say that people do emphathize or sympthasize with folks like Buffet or Trump or others. I think you are right that many of them are resentful of Buffet’s situation (I wish I had $50B to lose…). You view things as principlist but I have found that most people do not spend very much time thinking about princples. That’s not to say they don’t have values, but their values are more localized – family, friends, work – things/people with which they have an emotional connection. They are guided by their emotions, not by their principles. They feel and they act and react in accordance with those feelings. Logic, reason, common sense – those things simply don’t affect their behavior.
barker13 // Jul 20, 2009 at 5:12 pm
Re: Midcon // Jul 20, 2009 at 4:12 pm –
(*SIGH*)
Mid. If it were anyone else but you I must admit I’d be tuning out by now. Apparently, you’re so sure of yourself here that you’re blind to anything but trying to advance your position.
That poll question is a far cry from *my* question:
SHOULD ANY AMERICAN HAVE TO PAY MORE THAN 50% OF HIS OR HER INCOME IN TAXES?
(*SHRUG*)
I guess the “no” vote would be overwhelming.
Heck… I could come up with other questions concerning “surcharges” and “fees” too. I stand by my belief that the majority of the American People instinctively give a jaundiced to “taxes by another name” and that the American People believe in basic fairness as I would define fairness – i.e equality under the law.
Re: Midcon // Jul 20, 2009 at 4:24 pm –
“…I have become a decent judge of human behavior over the years.”
No doubt. Still… I’m a decent judge as well and beyond the judging I strongly believe that the GOP should be trying to move public opinion in the RIGHT direction as opposed to silently standing by when by their (by our!) beliefs particular facets of human behavior can and should be challenged with the goal being to bring about positive change.
“I wish I had $50B to lose…”
And so do I, Mid, so do I! May I assume if you were worth $50 billion you’d have me flown via your private jet to your private island so that we could continue this discussion while drinking your 50 year old Macallan?
(*HUGE FRIGG’N GRIN*)
“You view things as principlist…”
Again. While I appreciate the compliment inherent in the comment, you’re simply refusing to acknowledge even the possibility that my principle may survive and even triumph over cynicism, ignorance, and even self-centeredness; I believe it can.
I forget where he wrote it, but Sinz wrote (I’m paraphrasing) that just because something was in his person interest it doesn’t mean that he’d favor it against his perception of the national interest.
To hang my hat on Sinz’s principle, I believe that people can change, that selfishness, ignorance, and prejudice can be overcome. I’m not saying it’s easy… I’m not saying it’s a sure thing… I’m just saying it can be done.
“…values are more localized – family, friends, work – things/people with which they have an emotional connection.”
I hear ya! Hell… I echo ya! (*GRIN*) In this instance… with this particular specific policy example… we simply disagree where the line should (must?) be drawn.
“Logic, reason, common sense – those things simply don’t affect their behavior.”
(*FAUX FROWN*) Must EVERY thread untangle into a free for all criticizing Otto…?!?!
(*ROFLMAO*) (*WINK*)
BILL
midcon // Jul 20, 2009 at 5:17 pm
Barker,
It appears we’ve bee talking past each other. you said “That poll question is a far cry from *my* question: SHOULD ANY AMERICAN HAVE TO PAY MORE THAN 50% OF HIS OR HER INCOME IN TAXES?” My apologies for misreading what you wrote. My comments intended only to convey the lack of sympathy by average Americans for the very wealthy who would get hit with the marginal rates. The poll data I provided was indeed only to that point. Again, I misread your point. I do not believe anyone should have to pay half of their income in taxes, no do I think that any other American would think that. Sorry for the confusion.
ottovbvs // Jul 20, 2009 at 5:38 pm
barker13 // Jul 20, 2009 at 5:12 pm
“(*FAUX FROWN*) Must EVERY thread untangle into a free for all criticizing Otto…?!?!”
………Probably because I like fact based discussions rather than pointless bloviating about sfa…….in fact I looked up the the precise clinical definition of Fact Aversion Trauma (FAT)
Fact Aversion Trauma (FAT):
1. A form of brain damage caused by, often addictive, over-exposure to oral, visual and written toxins(eg. overly partisan political opinionating). Usual symptoms are denial of empirical evidence, official govt statistics, majority scientific and professional opinion, and the frequent expression of contradictory or confused opinions. Another common symptom is irregular or strange forms of address.
2. In it’s most extreme form the condition can result in hallucinatory claims of societal collapse, the end of the world as we know it, generalized doom, and demands for military coups.
3. Because FAT is a cranial condition extreme sufferers are some described pejoratively as Fatheads (Syn: dope, dupe, chump, naif, bozo)
barker13 // Jul 20, 2009 at 11:07 pm
Re: Midcon // Jul 20, 2009 at 5:17 pm –
No problem! Hell, the way I ramble on at times it’s a wonder I can keep track of my own thoughts!
(*CHUCKLE*)
* Hey… look… I seem to have driven Otto over the edge! Ha! Ha! Ha!
BILL
ottovbvs // Jul 21, 2009 at 8:29 am
barker13 // Jul 20, 2009 at 11:07 pm
“* Hey… look… I seem to have driven Otto over the edge! Ha! Ha! Ha!”
………..I’ll leave others to decide whether you exhibit any of the symptoms