Tax hikes - Yay or Nay?

[merithyn]

The problem is that with a lot of entitlement programs that is true.  It isnt an issue with the tax code it is a realization that helping the vulnerable in society helps all society.  Meri's point is more that people need to pay for what they recieve which is in a lot of ways the polar opposite of good public policy.  Those who need government services are the least able to pay for them and making them pay more would have the harmful effect of forcing more to seek those government services.

There's such a thing as balance. Having a government that helps The Population is far better than one that helps The Poor. When one focuses overly much on The Poor, The Population sees it as, "They took my money so that one deadbeat mother with 46 kids I saw that one time at the store buying cigarettes doesn't have to work!" When it's billed as, "This is for everyone, and everyone will benefit" you're more likely to get people to buy into it, which means you're more likely to get legislators to vote for it.

[The Minsky Moment]

But I think the problem is if you have a welfare state that's heavily targeted at those most in need it becomes a welfare state that's easy to cut. It's for other people - and I think in many countries rhetoric about it can become racially charged. Obviously lots of welfare is going to go to those who need it and should be targeted: the unemployed, the seriously disabled, the poorest.

So what you are talking about is increasing the tax burden on the working class/lower middle classes.
But this is the very class of people that has been squeezed the most over the last 30 years and seen their incomes stagnate or even decline.  "Base broadening" is just a euphemism for pushing their after tax incomes down even further.
I think for the US c. 2013 that is a very hard bill to sell.

[crazy canuck]

The problem is that with a lot of entitlement programs that is true.  It isnt an issue with the tax code it is a realization that helping the vulnerable in society helps all society.  Meri's point is more that people need to pay for what they recieve which is in a lot of ways the polar opposite of good public policy.  Those who need government services are the least able to pay for them and making them pay more would have the harmful effect of forcing more to seek those government services.

There's such a thing as balance. Having a government that helps The Population is far better than one that helps The Poor. When one focuses overly much on The Poor, The Population sees it as, "They took my money so that one deadbeat mother with 46 kids I saw that one time at the store buying cigarettes doesn't have to work!" When it's billed as, "This is for everyone, and everyone will benefit" you're more likely to get people to buy into it, which means you're more likely to get legislators to vote for it.

Universal entitlement programs make no sense.  We abandoned them more than 20 years ago.

There is one caveat to that and that is programs which require universal participation to work.  So for example single payor medical coverage and no fault insurance. 

[Sheilbh]

There's such a thing as balance. Having a government that helps The Population is far better than one that helps The Poor. When one focuses overly much on The Poor, The Population sees it as, "They took my money so that one deadbeat mother with 46 kids I saw that one time at the store buying cigarettes doesn't have to work!" When it's billed as, "This is for everyone, and everyone will benefit" you're more likely to get people to buy into it, which means you're more likely to get legislators to vote for it.

I agree, but we have to admit it's not the most efficient way of spending money.

[merithyn]

But I think the problem is if you have a welfare state that's heavily targeted at those most in need it becomes a welfare state that's easy to cut. It's for other people - and I think in many countries rhetoric about it can become racially charged. Obviously lots of welfare is going to go to those who need it and should be targeted: the unemployed, the seriously disabled, the poorest. But I think there's an advantage to some universal welfare provision: pension, healthcare, child benefit and childcare for example. The advantage is that it keeps middle-class and even some rich people involved in the welfare system. It isn't something 'for other people' that you don't have to worry about.

And the reverse works for taxes. If 47% of people aren't paying income tax that's a problem - and it's one that happened in Ireland - initially just because it's a very narrow tax base. Secondly I think there's a mirror image problem if tax rises become something that affects other people.

I mean that's a problem I have with Democrats. I often hear them calling for tax rises on the rich and it doesn't seem to be linked to spending, or to reducing the deficit, or to anything in particular. It just seems like a sort of rootless desire to tax someone else (the rich) more.

Exactly. Everyone has to buy into the system, and the only way that will work is if there's a carrot for everyone.

Reform is a given, imo. No one argues that, so I didn't bother to put it into the poll.

[mongers]

But I think the problem is if you have a welfare state that's heavily targeted at those most in need it becomes a welfare state that's easy to cut. It's for other people - and I think in many countries rhetoric about it can become racially charged. Obviously lots of welfare is going to go to those who need it and should be targeted: the unemployed, the seriously disabled, the poorest.

So what you are talking about is increasing the tax burden on the working class/lower middle classes.
But this is the very class of people that has been squeezed the most over the last 30 years and seen their incomes stagnate or even decline.  "Base broadening" is just a euphemism for pushing their after tax incomes down even further.
I think for the US c. 2013 that is a very hard bill to sell.

So you want to see income inequality reduced?

[grumbler]

In my opinion, what needs to be changed is the investment income taxation.  Corporate taxes should be eliminated entirely, but capital gains and dividend income need to be taxed as regular income.

Agreed.  The current system is more than asinine, its insane.

[merithyn]

Universal entitlement programs make no sense.  We abandoned them more than 20 years ago.

There is one caveat to that and that is programs which require universal participation to work.  So for example single payor medical coverage and no fault insurance.

Canada has universal healthcare. It has a pension system in place. It has a good infrastructure, and a decent military. Which "entitlement programs" that I mentioned did you cut?

[The Minsky Moment]

So you want to see income inequality reduced?

Ideally yes, but certainly I wouldn't rush to make changes that exacerbate the problem.

[crazy canuck]

Universal entitlement programs make no sense.  We abandoned them more than 20 years ago.

There is one caveat to that and that is programs which require universal participation to work.  So for example single payor medical coverage and no fault insurance.

Canada has universal healthcare. It has a pension system in place. It has a good infrastructure, and a decent military. Which "entitlement programs" that I mentioned did you cut?

Did you even read/understand my post.

[Sheilbh]

So what you are talking about is increasing the tax burden on the working class/lower middle classes.
But this is the very class of people that has been squeezed the most over the last 30 years and seen their incomes stagnate or even decline.  "Base broadening" is just a euphemism for pushing their after tax incomes down even further.
I think for the US c. 2013 that is a very hard bill to sell.

Yeah. I mean in the UK I actually think part of the problem is that we sort-of nationalised payrises for many low-income workers.

The minimum wage didn't increase significantly and neither did average wages. But the government provided a lot of different tax credits and so on (and cheap credit) filled the gap. Personally I think that's a problem and I would rather see those tax credits abolished, corporation tax cut and the minimum wage raised significantly because I think for lower-paid workers there's been a break between earnings and economic performance which government's possibly exacerbated by treating the symptom. I'd rather see actually wage increases.

So it shouldn't go on its own but I'd like to base broadening and policies to increase wages.

But I think there's a fundamental problem with a tax system that doesn't include around half the population.

[crazy canuck]

But I think there's a fundamental problem with a tax system that doesn't include around half the population.

Agreed but that is more a symptom of a dysfunctional economy  than a dysfunctional tax code.  Taxing people more on meagre earnings isnt that answer.  Partuclarly since those are the people who do not have the ability to legally avoid the tax.

[merithyn]

So what you are talking about is increasing the tax burden on the working class/lower middle classes.
But this is the very class of people that has been squeezed the most over the last 30 years and seen their incomes stagnate or even decline.  "Base broadening" is just a euphemism for pushing their after tax incomes down even further.
I think for the US c. 2013 that is a very hard bill to sell.

I think a slight increase for this group is necessary to get them on that side of things. Not enough to hurt them, but enough to make them feel "part of the plan". A graduated rate increase getting larger as you earn more income makes the most sense.

Right now, if you don't make much money, the government actually pays you.

[merithyn]

Universal entitlement programs make no sense.  We abandoned them more than 20 years ago.

There is one caveat to that and that is programs which require universal participation to work.  So for example single payor medical coverage and no fault insurance.

Canada has universal healthcare. It has a pension system in place. It has a good infrastructure, and a decent military. Which "entitlement programs" that I mentioned did you cut?

Did you even read/understand my post.

Yes. I'm trying to figure out what you meant by the unbolded part.

[merithyn]

Yeah. I mean in the UK I actually think part of the problem is that we sort-of nationalised payrises for many low-income workers.

The minimum wage didn't increase significantly and neither did average wages. But the government provided a lot of different tax credits and so on (and cheap credit) filled the gap. Personally I think that's a problem and I would rather see those tax credits abolished, corporation tax cut and the minimum wage raised significantly because I think for lower-paid workers there's been a break between earnings and economic performance which government's possibly exacerbated by treating the symptom. I'd rather see actually wage increases.

So it shouldn't go on its own but I'd like to base broadening and policies to increase wages.

But I think there's a fundamental problem with a tax system that doesn't include around half the population.