James Pethokoukis:
The case that income inequality is currently harming the US economy is not a strong one. A recent blockbuster study from the Equality of Opportunity Project found “little or no correlation” between the share of income going to the 1% and upward mobility. And new data analyzed by e21 has seriously undermined the White House’s “Great Gatsby Curve,” which supposedly suggested that diminished mobility was the logical consequence of higher income inequality: ”When we plot the inequality levels of the U.S., Canada, and Sweden against their relative mobility levels, the Great Gatsby Curve indicates that higher inequality corresponds with less immobility, not more.” Finally, CBO data find that real incomes for the broad middle-class were 40% higher in 2010 than in 1979, hardly stagnant.
Lots of inconvenient facts for die-hard, inequality worriers. Of course the impact of upper-tail income inequality could change in the future. A lack of GDP growth and good jobs would seem to be the bigger problem right now, though. To focus on inequality is to distract from improving mobility and raising living standards.
So with the economic case against income inequality in ill health, some progressives are switching to a moralistic, emotional one. Here is New York Times columnist Paul Krugman:
It’s all very well to talk in the abstract about the dignity of work, but to suggest that workers can have equal dignity despite huge inequality in pay is just silly. In 2012, the top 40 hedge fund managers and traders were paid a combined $16.7 billion, equivalent to the wages of 400,000 ordinary workers. Given that kind of disparity, can anyone really believe in the equal dignity of work?
How exactly would we determine “equal dignity of work?” Equal pay for all? Equal incomes for all? Some might suggest that, unfortunately. Scott Hodge of the Tax Foundation calculates that to give household in America the current average income of $82,000 would require taking 74% of the top 20%’s income versus 21% today and redistributing it. I would guess such an income grab would radically change incentives for work and risk taking for that group. Anyway, here is Krugman’s solution:
So what would give working Americans more dignity in their lives, despite huge income disparities? How about assuring them that the essentials — health care, opportunity for their children, a minimal income — will be there even if their boss fires them or their jobs are shipped overseas?
OK, he’s losing me here. I thought it was the pre-tax, pre-transfer disparity that was immoral? Is this column still about inequality? Now Krugman seems to be saying, what, that a stronger safety net and better schools will restore dignity to the middle-class despite that disparity? All is revealed in this next bit:
@Ronald J. Ward: #48
Imagine this: The Fair Tax is enacted, and your state doesn’t have a state income tax? You won’t have to fill out ONE page of a tax return for your state, or for the IRS, and the IRS would be gone. You CAN’T break ANY tax laws, because there wouldn’t be any tax laws to break. What a wonderful thought.
@Smorgasbord:
I prefer to argue an issue based on the facts at hand rather than imagination.
Also, an imagination can come with all kinds of scenarios why “your state doesn’t have a state income tax”. Federal tax code changes have no bearing on how states can generate revenue now or in the future.
@Smorgasbord:
.
But doesn’t the Fair Tax involve a federal sales tax? What do you think will happen then as an extra 10% sales tax is heaped upon the already existing state, county and local sales tax that people already pay? Do you think that driving up the cost of a product by 10% (I have forgotten how much the Fair Tax advocates) will increase sales of that product? And what will be the cost to small businesses that then have to keep up with not only the state, county and local sales tax they have to collect, but reporting to the federal government, as well?
Let me make it simple for you; a flat tax, no personal deductions. You earn $20K/year, pay 10%. You earn $20M/year, pay 10%. I don’t care if you have mortgage interest, six kids, or get a write off for your Red Wing work boots. One flat tax, across all income levels. And repeal the Earned Income Tax Credit. End of story.
@Ronald J. Ward:
That’s odd; most of your hyperbole comes from your imagination.
@retire05:
What tax rate do you pay if all your pay is ‘under the table’?
Every taxing method has it’s own set of problems. The national sales tax, I suspect would create a huge underground market system, as I understand if you don’t collect national sales taxes then you are not likely to be a licensed retailer.
@retire05: @Redteam:
2 trolls 2 minutes apart. Telling.
@Smorgasbord: #34
I once taught a college course on photography. Where I learned the difference between a good teacher and a bad one.
A good teacher wants to help others exceed himself.
A bad teacher wants to prevent that.
Trust me, there is no thrill in an instructor’s career greater than that which comes when you can tell a student: “I have nothing left to teach you.”
@Ronald J. Ward:
Marxist teabagging liberal troll showing up on a conservative web site. Telling.
@Ronald J. Ward:
Aside from your typical Democrat desire to tax everyone possible, You are assuming that all these people are evading taxes and thus “breaking the law”. That is not necessarily the case.
The IRS does not require that all income be reported. for example: Online Garage Sales
The IRS even put out a publication on taxable and nontaxable income
As I wrote before: For some of these, many local governments have laws on the book allowing some of these transactions (if that is the case, it is perfectly legal and you are not breaking any laws, but don’t expect all local governments to have the same rules). You are expected to check into relevant laws.
Some of which is not considered Federal taxable income:
If your employer gives you a turkey, ham, or other item of nominal value at Christmas or other holidays, do not include the value of the gift in your income.
If your employer sells you property or services at a discount, you may be able to exclude the amount of the discount from your income. The exclusion applies to discounts on property or services offered to customers in the ordinary course of the line of business in which you work. However, it does not apply to discounts on real property or property commonly held for investment (such as stocks or bonds).
You do not include in your income the value of meals and lodging provided to you and your family by your employer at no charge if the following conditions are met. (See IRS pub 525)
Bartering exchanges the individuals are expected to pay taxes on fair market value.
Do not include in your income governmental benefit payments from a public welfare fund based upon need, such as payments due to blindness. Payments from a state fund for the victims of crime should not be included in the victims’ incomes if they are in the nature of welfare payments. Do not deduct medical expenses that are reimbursed by such a fund. You must include in your income any welfare payments that are compensation for services or that are obtained fraudulently
Payments you receive from a state welfare agency for taking part in a work-training program are not included in your income, as long as the payments (exclusive of extra allowances for transportation or other costs) do not total more than the public welfare benefits you would have received otherwise.
Do not include in your income amounts you receive from the passengers for driving a car in a car pool to and from work. These amounts are considered reimbursement for your expenses.
A cash rebate you receive from a dealer or manufacturer of an item you buy is not income.
Alimony and child support you receive are not reported as income.
Notary Public services are reported on schedule C. These payments are not subject to self-employment tax.
In most cases, property you receive as a gift, bequest, or inheritance is not included in your income. However, if property you receive this way later produces income such as interest, dividends, or rents, that income is taxable to you.
If a prospective employer asks you to appear for an interview and either pays you an allowance or reimburses you for your transportation and other travel expenses, the amount you receive is not taxable in most cases.
Some that are taxable include:
The farmer with the roadside stand is expected to report that income on taxes.
Income from illegal activities, such as money from dealing illegal drugs, must be included.
Income from bribes.
Income earned from Organizing For America or other such political organizations; in most cases, you must include in gross income everything you receive in payment for personal services.
@Ronald J. Ward: #52
If everybody based their life on facts only, and not use their imagination, there would be a lot less billionaires. We also wouldn’t have the cars, or flush toilet, or the telephone, or the computer, etc. You liberals can stay in your fact based world as long as you like. I prefer the world of imagination.
Why are you trying to argue about something that doesn’t exist? You liberals just love to argue about ANYTHING. I never said federal taxes effect state revenue in any way. Where do you come up with this stuff? You would have had to use your IMAGINATION to come up with it, but you don’t like to use your imagination. That is one of the reasons you became a democrat. The democratic party doesn’t want people to use their imagination. Are you like your king, and had to ask your puppeteers what to say, since you don’t want to use YOUR imagination?
All I asked you to do was IMAGINE (meaning you don’t have to wish it will happen if you don’t want it to) the Fair Tax being enacted, and the state you live in not having a state income tax, so that EVRY PENNY YOU MAKE, you get to keep.
ImagineThink how that would be. No tax forms to fill out. Another GREAT BENEFIT would be eliminating the IRS.Most, if not all of the states that have NO state income tax are doing better than those who do. How can that be? After over 200 years, liberals still don’t understand the concept of getting revenue from the prosperity of the businesses, instead of taking it right off of the top, and take the money directly from their income.
Conservatives know that the more profit a business makes, the more they pay in taxes. Conservatives also know that the more a business has to pay in taxes, the less money there is for the operation of the business. The less money a business has, the less increase in wages there can be, and the less product the company can buy, and the less likelihood the business will expand. With lower taxes, the business can do all or some of these things, meaning others are making more money, meaning they will pay more in taxes. The contractor who added on to the business, or built another building somewhere else is making money off of the expansion, thus increasing it’s income, and might even put the contractor in a higher tax bracket.
All of the people making more money off of the lower taxes can eat out more often, buy a better car, move to a better neighborhood, buy the extras they couldn’t afford, and put more away for their kid’s college, or for retirement. All of the businesses where the EXTRA income is being spent are making more money, thus, paying more in taxes, thus the state and federal governments are bringing in MORE TAX REVENUE because of the LOWER TAXES. Since there is now more money going into savings and investment accounts, there is also more money to be loaned out to others. The more money they have, the lower the interest rate, because they aren’t making a penny off of money they have and can’t loan out.
All of the above really isn’t meant for you, since I know you are just a marionette for your king. It is for those who haven’t yet decided whether they want to be a liberal or conservative so they can understand a little bit better that capitalism is a good thing, not the bad thing liberals try to get us to believe.
@retire05: #53
YOU HAVE FALLEN FOR THE LIE THAT THE FAIR TAX IS ADDED ON TO OTHER TAXES
As I have mentioned different times, before a person wants to discuss something, they should read up on it before trying to condemn it. I suggest buying the book. It was much easier to follow than trying to go to the different sites on their web page. It won’t take long to read it. Your library might have it. The Fair Tax web site is at:
http://www.fairtax.org/site/PageServer
Most questions are answered here:
http://www.fairtax.org/site/PageServer?pagename=FAQs#7
First, the tax 23%. That is what the ones who came up with the Fair Tax figure the average peson pays in federal taxes, when you figure in all of the income tax, fuel tax, tire tax, Social Security tax, and other federal taxes paid on MANY other products. My personal opinion is that the tax should start out lower, because it can be raised when needed, but if it would actually bring in more revenue, you know the politicians will just find a way to spend it.
The tax will only be on NEW items and services, and everything will be taxed (food, drugs, cable, water, sewer, contractors, etc.), but the price of the things will still be the same after the Fair Tax is in effect. You won’t pay any more. Anything you sell that isn’t new, there is no tax on it. Legally, you have to report ALL OF THAT INCOME now.
Since business won’t be paying any federal taxes any more, that means that a business will be operating with about 23% less in expenses, so the product or service can be sold for that much less, but the company would still make the same amount of profit. One thing I REALLY like about the Fair Tax is that you will see the total amount for the products or services bought, then you will see the amount of the tax on the receipt, then you will see that what cost you $100 before the Fair Tax, will still cost you $100 after it.
Again, you have fallen for the idea it is an ADDED ON TAX when it isn’t. It REPLACES all of the federal taxes. This includes the Social Security withholding tax, and all of the other federal taxes on your list of deductions. The businesses only have to keep track of ONE federal tax revenue, and send it to ONE place. Look at the list of federal deductions on your pay stub. Those won’t be there any more. Instead, your paycheck will be that much larger.
The Flat Tax would be my second choice. The tax should start for those above the poverty level. It still has it’s problems. The ones who work for cash (like the illegals) still won’t pay ANY taxes. In the trucking industry, a lot of the people hired to load and unload trucks (lumpers) have to be paid in cash by the trucking company, and that money is not reported. I heard one lumper talking to another lumper about his welfare check. He was making at least$500 to $1,000 per day, and still getting welfare. The Fair Tax would end this.
Look how much extra revenue will come from the 10-20,000,000 estimated illegals who will still be buying stuff like the always have, but will be paying the tax now. The Fair Tax will also get rid of the people receiving welfare, but working for cash. We don’t know how many billions are given as welfare. We don’t even know how many agencies have a welfare department in them, and they aren’t hooked up to each other, so people are getting welfare from several different agencies, and none of them know about the other payments.
You also would still have the IRS and the possibility of it targeting individuals or groups that the party in power wants stopped or slowed.
The Fair Tax has the stupidest way of taking care of the poor that I have ever heard of, but it will work. Before I explain it AGAIN, please try to be open mined about it, and not automatically be against it. I started reading about it and thought it was REALLY stupid, until I tried to figure out how much the welfare system is costing, not just the money to the recipients, but by having so many different agencies, and each one having many employees that are earning about 40% more, including the extra benefits, than the equivalent civilian job. It wouldn’t surprise me if we are paying out trillions of dollars each year for welfare.
Please don’t laugh when I tell you that the founding fathers of the Fair Tax came up with the idea of taking the poverty level, dividing it by 12, then giving a check for that amount each month to every family.
http://www.fairtax.org/PDF/PrebateExplained.pdf
A lot of people don’t like the idea of giving the money out like this, but I am guessing it will amount to a lot less than we are spending on the welfare system now, and the ones who have been getting welfare, can now LEGALLY go out and earn any EXTRA amount they want and not have to report it as income, since there won’t be an agency to report it to, and if the item or service is new, then they paid the tax on it, and they are ADDING MONEY to the federal treasury instead of SUBTRACTING MONEY from it.
One way to try out the Fair Tax would be to ask a state to volunteer to try it and see how it goes for that state. I will volunteer Idaho as the first guinea pig.
@Petercat: #57
For many years I have said that there are underpaid professions:
(1) Cops on the streets.
(2) Firefighters. Especially the volunteer ones.
(3) GOOD teaches. They help form what a child will be later on in life. That is why the liberals are infiltrating our schools to brainwash them into liberalism.
how many court case now for OBAMA impeachment, or other,
there is enough to pass 2014, apart with the court case on IRS,he will have time to go back to indonezia.
where he spend his youth,