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May 12, 2010

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Stephen

http://www.taxfoundation.org/taxdata/show/151.html

Compare page 1 vs page 34...

I'd say the middle class is still paying pretty similar rates. The poor and the rich pay a lot less...

Dave Ribar

Ed:

The figures that U.S. News cites are misleading because they fail to account for mandatory contributions to government social insurance programs (those contributions are in neither the numerator or denominator of the calculation). If you were to include those contributions, the effective tax rate would climb to 16%.

Even that figure might be too low because the base/denominator includes government salaries and transfers. The figure that we would really be interested in is how much private activity is taxed to pay for the government sector.

justcorbly

If people didn't make "mandatory contributions" to government insurance programs, then they would face the choice of making similar payments to private insurance corporations or foregoing health care, etc. I cannot understand why some people would opt for the so-called freedom to lack health care, a secure retirement, etc.

Dave Ribar

JC:

The same could be said about many government programs.

Also, those mandatory contributions don't return the same benefits to everyone. For example, low-income workers get a much higher return on their (and their employers') social security contributions than high-income workers.

In addition, given the pay-as-you-go social insurance system, current workers' payments actually go to cover someone else's pension and insurance, so they are not quite the same as people making payments on their own behalf.

justcorbly

Understood, Dave. I don't see the points you raise as negatives.

Spag

The stimulus is paid for in tax dollars, so crediting it for reducing a tax burden is circular.

Also, someone needs to go over to justcorbly's and take all of his money and let him live off of the government programs he is in love with considering he is so willing to contribute to the federal coffers.

JC

corbly, how "secure" is that retirement when Social Security becomes insolvent? Can you see why people would desire the "so-called freedom" to opt out of these programs then?

Ed Cone

A substantial part of the stimulus bill was made up of tax cuts, which is how the stimulus figures in tax-rate reduction.

Spag

Most of those "cuts" are a reduction in witholding and tax credits, the latter which are subsidized in many cases by other tax revenues.

justcorbly

JC, I don't agree with your assumption that Social Security will go insolvent. That said, what happened to your 401k 18 months ago? Is there a private investment that can be guaranteed secure over the long term? I have one uncle whose retirement savings disappeared overnight when the company where he'd worked for 30 years went belly up. I've another relative who has lost about 50 percent of his retirement because the company he worked for can't, or won't, make good on its contracts with its own workers.

What good is freedom to choose when you can't trust the people you need to put your faith in?

Better to have a tax-funded system that underpins everyone rather than a private system that allows people to "opt out" and then place even additional demand on the rest of us when the fruits of their choice turn sour.

Notions that we are all going to live in a conservative fantasy world in which everyone lives or dies by the merits of their own "personal responsiblity", where grandpa and grandma are taken in by the kids who happily fund their dialysis and chemotherapy, and where charity and churches take care of all the other problems is just that: fantasy. The reality would be a dark and dismal world of a wealthy few and many poor. Resources are going to shrink, in absolute terms and in relative terms measured against poplation growth. A purely market economy cannot produce or distribute those resources appropriately.

Ed Cone

Here's a list.

JC

My 401(K) took a substantial drop like most others in the market. It has since rebounded; not to the point it was before but I am still in positive territory on my investments.

It is a much better system than one you have to hope and pray that there will be anything left by the time you get to retirement age. I agree about trusting the people you need to put your faith in; what about the funds that historically were taken from the social security trust fund to pay for other endeavors? That certainly hasnt just been a republican problem...

I actually like your definition of a "fantasy world". I think it serves us much better than the current fantasy we live in that all responsibility aside, big government will take care of you. The fantasy is that we will somehow come out of this recession faster, regardless of an aging population, the massive expansion of government spending and entitlement programs, and the increase of the taxation on industry.

cheripickr

Corbly "....where charity and churches take care of all the other problems..."
I agree that would be a fantasy world. But (1)under what philosophy or system of government exists the right for anyone to be "taken care of" of at others' involuntary expense? I ask this in all seriousness, and (2)do you believe in such a right, either within your own ideology or that it our current system of government delineates such a right? (3) If so, where?

Jim Caserta

I pay social-security and medicare taxes, and that money goes towards someone else's benefit. If you want to consider the 'trust fund' savings that is still a small portion of what I put in. Those systems have always been a transfer system where current workers pay for the benefits of retirees.

There are clear delineations by age, and I think people with disabilities are eligible for SS & medicare. So the feds delineate. The argument that current retirees paid into the system so they're just getting their money back doesn't hold because of the increase in SS tax rates - 10.1% in 1978 vs. 12.4% today.

CP - do you have a deep philosophical objection to our current system?

cheripickr

No I don't. But then again I haven't been trying to change it. Do you object to me asking someone else questions? And if not, since your last question was in response to them, would you care to answer them yourself?

Dave Ribar

CP:

Our system of government effectively grants lots of these rights. For example, children effectively have a right to a public education (some state courts have interpreted this as a fundamental right; the Supreme Court, however, has interpreted it differently). Congress has also passed laws that effectively give sick people the right to emergency room treatment, at least at any hospital that receives government funding.

justcorbly

I think framing questions in terms of who has a right to do what is too narrow. That framework always results in constraining our behaviors based on the ideology currently subscribed to by the people wielding political power. No ideology is sufficient to the tasks we face, much less to the tasks we will face.

In the medium and long term (20-100 years, say) I expect to see global problems that will, quite possibly, overwhelm the ability of our current nation-state structure to cope.

I don't believe a pure market approach can resolve all those problems. I don't believe a pure government approach can resolve all those problems. I don't believe an approach rooted in any ideology, on either side of the spectrum can resolve all those problems.

I specifically oppose government rooted in ideology because such governments inevitably sacrifice the welfare of their citizens in order to create false demonstrations of that ideology's virtue.

What I do support, and what I believe we will increasingly require, is government that is effective at identifying and ameliorating problems witout regard to ideology. Given appropriate barriers to extremism on either end of the spectrum, I want to see the most effective tools deployed against our problems.

For example, take the current oil spill in the Gulf of Mexico. My interest is in seeing it plugged as rapidly as possible. If that's something BP and the private sector can do fine. If the government can do it faster, that's fine, too. If some mix of both can do it even faster, that's even better. I am not at all interested in anyone who wants to risk causing harm to other people in an attempt to demonstrate the value of his or her own ideology.

To answer CP's specific question, I think we have an obligation to see to the welfare of others that at least equals are right to do with our own resources as we see fit. I do not believe that individual acts of concern and charity are at all sufficient in that regard. (Most of us are far too selfish and self-centered. I.e., people are bastards.) So, yes, taking my money to assist people I do not know is OK with me.

cheripickr

Why do you see the need to qualify your answers about rights with the word "effectively" over and over? "Effectively" granting someone's particular needs doesn't establish the fulfilling of that need as a right that somone else is obligated to fulfill. Do you ideologically or definitionally believe that any new entitlement voted through by Congress, on that basis alone qualifies it as a de facto fundamental right from then on? If so, what else would you like to see added to the ever-growinglist? And as an economist, can I assume you've got the economic soundness and sustainability of it all worked out?

cheripickr

Thanks, JC, for the detailed answer. However, the sum total of your comments that I have ever read in this forum does not accurately describe the person depicted in your self-assessment below. At very least, I have only been exposed to your pro-government side, by some odd coincidence. I guess on some level, we all consider ourselves middle-of-the-road. It's cool.

"I don't believe a pure market approach can resolve all those problems. I don't believe a pure government approach can resolve all those problems. I don't believe an approach rooted in any ideology, on either side of the spectrum can resolve all those problems."

justcorbly

>>..granting someone's particular needs doesn't establish the fulfilling of that need as a right that somone else is obligated to fulfill.

I've already answered that: ...we have an obligation to see to the welfare of others that at least equals are right to do with our own resources as we see fit.

>> Do you ideologically or definitionally believe that any new entitlement voted through by Congress, on that basis alone qualifies it as a de facto fundamental right from then on?

As I said, framing issues in terms of rights is too narrow a framework. Congress has no ability to create or destroy rights. None of us do. If I think a new entitlement is an appropriate solution to a problem, then I'd support it. If circumstances changed it it became less effective, I'd look for something else.

Future problems? For starters, the growing disparity between the power of global corporations and the ability of national governments to deal with the problems they provoke; food and other resource shortages caused by population growth; lack of cheap clean energy; climate change (Some here will say they don't believe in that, but their choice to frame the issue as one of "belief" is part of the point I'm trying to make.); the seemingly unending willingness of many of us to adopt faiths and creeds that comfort, rather than challenge, the bigotries and resentments that are inherent in all of our personalities.

I don't believe our rights increase or decrease over time. We have exactly the same rights today as our ancesters did in Africa tens of millenia ago. What does change over time is our readiness to accept restraints on our rights. At the beginning of Western civilization, people gave up the ability to exercise some of their rights so they could live in a city controlled by priests who claimed to speak with the gods. Some people in in the Americas before the European invasions were willing to sacrifce the lives of their chilren on priestly altars. Not too long ago, monarchs asserted and their subjects believed that kings and queens ruled with the guidance of the divine. All infringed on rights, but were part of a bargain people made.

Our willingess to assert or to subvert our rights depends, then, on
our assessment of the cost of asserting those rights. You, for example, may think that a system like the NHS resticts too many of your rights in return for providing health care for everyone. I disagree, because I see the need to buy private health insurance as an unwanted obligation, while seeing access to health care as a right.

Spag

I love the discussion of "rights" because it always involves a person or two who can't tell you where "rights" come from and why they are "rights". The word is thrown around and invoked by liberals so often, yet few can actually defend its employ in any educated way.

cheripickr

Thanks again, JC. FYI, the questions you just answered in such detail were directed at Ribar's previous post, but I appreciate your perspective as well.

Dave Ribar

CP:

In the U.S., the "rights" that people enjoy differ depending on their state of residence. There are rights that are recognized as part of the Constitution but additional rights that are recognized as parts of state constitutions. Thus, residents of Massachusetts have the right to marry whomever they want; residents of North Carolina do not have this right.

Constitutional "rights" can also change over time, depending on the Supreme Court's interpretation of the Constitution. Prior to 1954, the U.S. did not recognize a right to integrated schools; after 1954, it did. Thus, by a Supreme Court decision, a right was either created or found.

Constitutional rights can also be taken away. Ultimately, the Constitution is a political document. A constitutional convention or an amendment could wipe out any "right" that is in the document. To the extent that the Constitution allows this, can we really say that we have any "rights?"

There are also de facto rights that people enjoy through legislation. Medical care for the elderly, income assistance for the disabled and aged, public schooling for children are examples of de facto rights. These are de facto rights because it is difficult to imagine the government taking these things away. There is no Constitutional provision, but there is also no political will to undo these.

Rights are described in many documents, including our Declaration of Independence and the Universal Declaration of Human Rights. However, these are declarations and not constitutions.

Jim Caserta

The programs I identified are not 'rights' in the sense that they cannot be revoked by mere legislation. Congress could make dramatic changes to social security and medicare, cutting benefits, and there would be no Constitutional argument against that. Voters on the other hand...Now can Congress tax and spend in ways that they currently are and have in the past within the framework of our Constitution?

So is Medicare a right guaranteed by the Constitution - no. Is it a legal program - yes. Does Congress have the ability to tax one group and spend to benefit another - yes.

Spag

Dave, it appears you are confusing rights with privileges in some cases. What are "rights"? What makes them a "right"? Where do they come from? Natural law? Man? God? Are rights universal?

justcorbly

>> I guess on some level, we all consider ourselves middle-of-the-road. It's cool.

"I don't believe a pure market approach can resolve all those problems. I don't believe a pure government approach can resolve all those problems. I don't believe an approach rooted in any ideology, on either side of the spectrum can resolve all those problems."

I don't consider myself middle-of-the-road. It seems to me that politics and government is typically rooted in one ideology or another, which limits the ranger of possible solutions under consideration. I.e., people may agree that a problem exists and needs to be resolved, but the only approach they are willing to take is one the accords with their beliefs. i don't think we can afford that.

As for rights... I don't know where they came from. I don't think that is a question of any practical importance. How could we know they are from God when we can't determine the nature, location, or even the existence of God? "Natural law" presumes the existence of someone or something that created the law. Deriving rights from God or natural law is a proposition that rests only on belief and faith.

If a right exists, it must exists for everyone. Governments or other powers cannot create or destroy rights, only hinder or facilitate their exercise.

An overview of what humans think our rights are might be taken from the constitutions, declarations, etc., of the UN and various nations. We do not seem to differ greatly in our identification of those rights. What differences that exist can probably be attributed to the era in which the document as written. E.g., a modern document might identify a right to the privacy of communications, while the U.S. Constitution does not because the issue, as it currently exists, was unknown to its authors. But, we may decide that the right exists and expect Congress to legislate and the courts to rule accordingly. I.e., that right would exist even if not explicitly listed in the Constitution. In fact, that right would exist even if Congress and the courts abrogated it.

An ideology that narrowly constrains government action to behavior held to be in strict and literal accord with rights tallied in a document seems to me, among other things, to ultimately counter the notion of representative democratic government. No right, for example, is listed in the Constitution that specifically addresses the issue of the territorial expansion of the U.S. Yet presidents like Jefferson and Tyler, and their Congresses, certainly expanded the country's territory.

No right is specifically tallied to address the use of tax funds to clear snow from sidewalks. That doesn't make it illegal. It represents the use of government to accomplish a task that people want accomplished. Attempts to focus the discussion on whether or not anyone has a right to expect the government to clear snow off sidewalks seem to come from a desire to place fidelity to belief above legal government action, and a willingness to constrain our ability to exercise our rights because of that belief. That is, if I think I have a right to walk down the sidewalk unhindered by snow, and if the government legally uses tax funds to clear that snow, then I will look unkindly on anyone who argues that government should not do that because they think I do not have the right to expect government to clear snow.

Bubba

"Deriving rights from God or natural law is a proposition that rests only on belief and faith."

Yes, of course. The priesthood of secular humanism is undoubtedly the only source where rights should be derived.

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