Spreading the wealth around...

[jsteele]

Anonymous wrote:Jeff, want to weigh in on this? We've been puzzling over this in my house too -- how the 40% of households that pay no federal income tax will get a tax cut. I can't find an explanation on the TPC site.

Well, I have to tread carefully because this issue was the source of my biggest display of ignorance in the forum yet. But, since I try to learn from my mistakes, I have a better handle on it now.

Obama will cut taxes for all tax brackets less than $250,000. If your adjusted gross income is not high enough to pay taxes on it, you will not get a tax cut. However, Obama also proposes a refundable tax credit for working families. The amount phases out based on income, so really its for poor and lower middle class working families. What I previously didn't understand, and ended up looking pretty foolish about as a result, is that a refundable tax credit is not really a refund. Rather, its simply a check whether you paid taxes or not. I would object to calling it welfare, because all recipients would be working, just not earning enough to pay taxes. Also, while it is a negative income tax, the recipients do pay other taxes, most notably the payroll tax. The refund will not come out of the payroll tax fund, so it has no effect on social security. But, from the recipient's viewpoint, it will offset some of what they pay in payroll taxes.

All of these ideas are rooted in the fact that all families must pay for certain necessities such as food, housing, clothing, basic healthcare, etc. Many working families have a hard time providing for even these basic necessities. Obama wants to make it possible for them to meet their basic needs, and maybe even have a little left over. The wealthy have benefitted from all kinds of tax breaks. For years we have heard about "trickle down" and how if the wealthy could keep more money, they would create jobs and the poor will benefit. Instead, the wealthy bought derivatives and now we are bailing them out.

Obama proposes "trickle up". If the working poor have more money, they can send their kids to college. They can purchase homes. They can remodel those homes which would involve spending money on goods and services. The wealthy will benefit when they have more customers for their businesses.

When Obama says "spread the wealth", he isn't simply saying he wants to take from the rich and give to the poor. He is saying that the wealthy have been getting huge benefits and not providing much in return. Let them pay their fair share, let the poor and middle class get some new benefits, and then those who have been just scraping by can live a little better -- maybe even becoming wealthy.

[Anonymous]

Except that people who need assistance can get it via medicaid, food stamps, etc.

So what this is doing is taking more money from what I earn and passing it on to others.

Look what happened in Hawaii. The state just announced it was suspending universal health care because people who had previously been paying for their healthcare were dropping into the state system because "it was free".

[Anonymous]

I think all Americans should have to pay taxes - even if they pay $5. Everyone should have a stake in this country and should have to sit down at tax time, write a check and think about where their money is going.

[Anonymous]

Correct me if I'm wrong, but as I understand Obama's tax plan, those who currently get an EIC and actually RECEIVE money at tax time would stand to get an even bigger check under his tax code.

Hmmm. Sounds like welfare to me, with lipstick. But if you look at the number of people who are in those lower tax brackets, and you promise them bigger checks and/or lower taxes, it stands to reason the 90% will vote for you.

[Anonymous]

Anonymous wrote:Correct me if I'm wrong, but as I understand Obama's tax plan, those who currently get an EIC and actually RECEIVE money at tax time would stand to get an even bigger check under his tax code.

Absolutely. Why doesn't this make it to the front page, above the fold?

Anonymous wrote:Hmmm. Sounds like welfare to me, with lipstick. But if you look at the number of people who are in those lower tax brackets, and you promise them bigger checks and/or lower taxes, it stands to reason the 90% will vote for you.

Pandering, anyone?

[Anonymous]

Anonymous wrote:

Anonymous wrote:Correct me if I'm wrong, but as I understand Obama's tax plan, those who currently get an EIC and actually RECEIVE money at tax time would stand to get an even bigger check under his tax code.

Absolutely. Why doesn't this make it to the front page, above the fold?

Anonymous wrote:Hmmm. Sounds like welfare to me, with lipstick. But if you look at the number of people who are in those lower tax brackets, and you promise them bigger checks and/or lower taxes, it stands to reason the 90% will vote for you.

Pandering, anyone?

Promising tax cuts to the upper tax brackets was also pandering, then.

If a majority of the US public were in the upper tax brackets, and had great health care coverage, then promising them all tax cuts and better health care coverage would win the election.

Problem is, fewer and fewer people are in that upper tax bracket nowadays.

Democracy stinks, doesn't it?

[Anonymous]

Anonymous wrote:

Anonymous wrote:Hmmm. Sounds like welfare to me, with lipstick. But if you look at the number of people who are in those lower tax brackets, and you promise them bigger checks and/or lower taxes, it stands to reason the 90% will vote for you.

Pandering, anyone?

Oh, and the rich and upper middle class people who will get McCain's tax break aren't being pandered to? Guess what -- the upper middle class vote in much higher percentages than the poor. So if anyone is pandering, it's McCain.

But to my mind it is a matter of degree. They're both promising something they can't follow through on. It's ridiculous, given the mess of the economy. I'm willing to sacrifice for my country and not get a friggin' tax cut.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Hmmm. Sounds like welfare to me, with lipstick. But if you look at the number of people who are in those lower tax brackets, and you promise them bigger checks and/or lower taxes, it stands to reason the 90% will vote for you.

Pandering, anyone?

Oh, and the rich and upper middle class people who will get McCain's tax break aren't being pandered to? Guess what -- the upper middle class vote in much higher percentages than the poor. So if anyone is pandering, it's McCain.

But to my mind it is a matter of degree. They're both promising something they can't follow through on. It's ridiculous, given the mess of the economy. I'm willing to sacrifice for my country and not get a friggin' tax cut.

I'm willing to sacrifice for my country too. My objection to the Dem's redistribution of wealth is that by making it a federal budget program, it is destined for bureaucratic red tape and pork. At least on the local and state levels, the relief would be more customized to the need and closer to the source. I can't think of many federal programs that are done well enough for me to think big government is a good thing.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Hmmm. Sounds like welfare to me, with lipstick. But if you look at the number of people who are in those lower tax brackets, and you promise them bigger checks and/or lower taxes, it stands to reason the 90% will vote for you.

Pandering, anyone?

Oh, and the rich and upper middle class people who will get McCain's tax break aren't being pandered to? Guess what -- the upper middle class vote in much higher percentages than the poor. So if anyone is pandering, it's McCain.

But to my mind it is a matter of degree. They're both promising something they can't follow through on. It's ridiculous, given the mess of the economy. I'm willing to sacrifice for my country and not get a friggin' tax cut.

Maybe, but in one situation people are getting a promise that they can keep more of their own money, and in the other situation people are being promised that the government will give them money that they take away from the 'fat cats.'

[jsteele]

Anonymous wrote:
Maybe, but in one situation people are getting a promise that they can keep more of their own money, and in the other situation people are being promised that the government will give them money that they take away from the 'fat cats.'

That's only true if you focus very narrowly on income tax. If you look at the entire array of taxes paid, working families will not be getting a handout.

[Anonymous]

jsteele wrote:

Anonymous wrote:
Maybe, but in one situation people are getting a promise that they can keep more of their own money, and in the other situation people are being promised that the government will give them money that they take away from the 'fat cats.'

That's only true if you focus very narrowly on income tax. If you look at the entire array of taxes paid, working families will not be getting a handout.

Mr. Steele, are you ready to say that some families don't need to contribute to SS taxes, while remaining eligible for future benefits? If so, that is a totally different argument. Obama began with the statement that 95% of Americans would see a reduction of their income taxes. He has nuanced the argument to remove the word INCOME from the discussion. Maybe McCain was right when he said listen carefully to the words.

[jsteele]

Anonymous wrote:

Mr. Steele, are you ready to say that some families don't need to contribute to SS taxes, while remaining eligible for future benefits? If so, that is a totally different argument. Obama began with the statement that 95% of Americans would see a reduction of their income taxes. He has nuanced the argument to remove the word INCOME from the discussion. Maybe McCain was right when he said listen carefully to the words.

No, I am not ready to say that. What I am saying is that a low income worker may not have an adjusted gross income that reaches the threshold required to pay income tax. However, that worker does pay payroll taxes. Under Obama's plan, this worker will receive a "refundable tax credit". Some say that this is welfare because its a transfer of income taxes from the wealthy who pay them to the financially less well off who don't. What I am saying is that the refund should be seen in the larger context of the worker's tax burden. The refund offsets other taxes such as the payroll tax. The worker still pays into social security, but those payments are partially made up for by the refundable tax credit.

There is a misconception that someone is getting something for free. That's not the case. Rather, people are getting to keep more of what they earn. That has practically been the battle cry of those at the top of the earning scale, but now that it will benefit others, they are crying "socialism". Those at the top will get to keep a little less than they have been, but they did pretty well under Clinton with the same tax rates.

[Anonymous]

Is it really worth dissecting tax plans that, even under ordinary circumstances, would be subject to negotiation with Congress. And under the present circumstances, the changes in the economy have probably turned them into total fiction.

I guess they are worth discussing as indicators of the candidates' economic philosophy.

[Anonymous]

jsteele wrote:

What I am saying is that the refund should be seen in the larger context of the worker's tax burden. The refund offsets other taxes such as the payroll tax. The worker still pays into social security, but those payments are partially made up for by the refundable tax credit.

There is a misconception that someone is getting something for free. That's not the case. Rather, people are getting to keep more of what they earn. That has practically been the battle cry of those at the top of the earning scale, but now that it will benefit others, they are crying "socialism". Those at the top will get to keep a little less than they have been, but they did pretty well under Clinton with the same tax rates.

I don't know... So this worker has paid into SS, probably gets Medicare/Medicaid, paid payroll taxes, and gets a bigger EIC credit? I can tell you this: my SIL qualifies for EIC, and she lives in a $300,000 house in Michigan. She has a big screen tv, a PC and a laptop, two cats, you get the idea. While she may be foreclosed on, and rightly so, it burns me up every year to write my check to the IRS for tens of thousands of dollars and hear her and people like her (remember the stimulus checks?) planning how they will spend said checks on new 'toys'.

If, and it's a big if, I *ever* bought into redistribution of wealth and big government dole-outs, a prerequisite would be some kind of voucher system for housing credits and food stamps. If you're getting EIC, you damn sure ought not to be watching Tivo on your 47" LCD TV! I don't mind helping people, but I really mind when people scam the system or view additional kids as variable income.

[jsteele]

Anonymous wrote:
I don't know... So this worker has paid into SS, probably gets Medicare/Medicaid, paid payroll taxes, and gets a bigger EIC credit? I can tell you this: my SIL qualifies for EIC, and she lives in a $300,000 house in Michigan. She has a big screen tv, a PC and a laptop, two cats, you get the idea. While she may be foreclosed on, and rightly so, it burns me up every year to write my check to the IRS for tens of thousands of dollars and hear her and people like her (remember the stimulus checks?) planning how they will spend said checks on new 'toys'.

I don't really have a problem with the tv, pc, laptop, or cats, but I have to question how someone simultaneously qualifies for EIC and a $300,000 mortgage. That sounds like the sort of thing that got us into this mess. Obviously, there will always be abusers. Just think how much of the $700 billion is going to get siphoned off by cheats who already make millions.