Warping Fairness: The Socioeconomic Doom of Liberal Tax Policy (Ruth Marcus)

Rick Perry’s warped tax ‘injustice’

By Ruth Marcus, Monday, August 15, 1:58 PM

“We’re dismayed at the injustice that nearly half of all Americans don’t even pay any income tax.”

— Texas Gov. Rick Perry, presidential candidacy announcement speech, Aug. 13

Really? Of all the ills in the world, of all the problems with the economy, all the difficulties with the tax code, this is the one that Perry chooses to lament?

Yes, and rightly so, because the moment that 51% of the country uses the government to siphon the wealth of 49% of the population, Democracy yields to the tyranny of the majority. The income tax is particularly insidious because it disincentivizes economic production, making the disparity all the more glaring. That “shared burden” is a euphemism for more contributions from the upper class is a perverse joke.

Perry’s statement conjures visions of America as Slacker Nation, where the overburdened wagon-pullers drag an increasingly heavy burden of freeloaders.

What Perry’s words evoke is cultural decay as a result of intrusive government. Never in our nation’s history has the idea of the American Dream been in so much jeopardy. A combination of entitlements and skyrocketing regulation have seriously threatened the concept of a self-made man, an all-American idea and the secret to 200+ years of success.

His number is correct but, like other conservatives who have seized on the statistic, Perry draws from it a dangerously misleading lesson.

No, he doesn’t. Here’s where you start talking about irrelevant tax statistics that are meant to drown the casual reader in bullshit.

The nonpartisan Tax Policy Center estimates that 46.4 percent of households will pay no federal income tax in 2011.

Which is squarely in “holy shit, really?” territory.

This is, for the most part, not because people have chosen to loaf.

Nonsense. Not paying taxes is a function of low earnings, which are a function of a lack of marketable skills. A lack of marketable skills is a function of loafing. In a country with a dearth of skilled (not educated, mind you, skilled) laborers, significant parts of unemployment are the function of a non-adaptive (read: entrenched, entitled, and lazy) work force.

It’s because they are working but simply don’t earn enough to owe income taxes,

Well no shit. The fact that they’re working—perhaps very hard—at something the labor market doesn’t value highly is equivalent to loafing. Yet by coddling low earners with a sharply progressive tax system, the government is implicitly subsidizing inefficient economic activity. Nevermind the ineptitude that goes into a prolonged $20,000 salary. At least they’re trying. And by trying, of course, I mean showing up long enough to get employment benefits.

based on the progressive structure of the tax code and provisions designed to help the working poor and lower-income seniors.

Helping the poor through progressive policy is another euphemistically perverse joke.

As the Tax Policy Center’s Roberton Williams has explained, “a couple with two children earning less than $26,400

$26,400 amounts to a wage of roughly $13.20 per hour for one person per year or $6.60 per hour for two people working full time. Since $6.60/hr is 10% below the federal minimum wage (and several states are magnitudes higher) one parent must, by mathematical necessity, be loafing.

will pay no federal income tax this year because their $11,600 standard deduction and four exemptions of $3,700 each reduce their taxable income to zero. The basic structure of the income tax simply exempts subsistence levels of income from tax.”

No one claimed it was illegal, only that the government policy that rewards it is immoral and counterproductive. Which it is.

Does Perry truly see this as an “injustice”?

Yes, and so do I. Of course, neither of us is advocating a 50% rate for the lowest tax bracket. I’m not even arguing a flat system. Just enough so that these people have some skin in the game.

Does he believe his “dismay” should be alleviated by raising the tax burden on these households?

There is no tax burden. Raising the tax burden from zero to slightly above zero isn’t punitive. It’s just common sense.

Consider: Of those households that do not owe income taxes, about a third earn $10,000 a year

Which means that no one in that household works full time.

and a slightly smaller share earn between $10,000 and $20,000.

Which means that there’s probably no one in that household that works full time.

More than three-fourths earn $30,000 or less.

Literally not a word of that sentence was worth considering. It has absolutely nothing to do with the argument that Perry was making.

In addition, the notion that these households pay no taxes is flat-out wrong.

Which is why it’s specifically not what Perry said, Little Miss Reading Comprehension.

They pay — leaving aside state and local sales, income and property taxes —

Let’s not leave them aside. Sales taxes are slightly regressive, but only because of income elasticity. In fact, it reveals more about what’s wrong with the “regressive/progressive” scale of taxation than anything else.

State and local sales taxes, which are by and large scaled-down versions of the federal income tax (unless you’re in Texas—Rick Perry shout-out!) are similarly progressive. And what’s more, the poor very rarely own houses or property, making property taxes completely irrelevant to this conversation, and also progressive.

So she leaves them out because all three of these tax groups track precisely with Perry’s argument that the tax code is oppressive on the wealthy and coddles the lower and lower-middle class.

federal gasoline

Which Democrats wanted to increase in a colossally misguided attempt to stick it to Big Oil. Matt Miller was leading the charge into that brick wall of stupidity.

and other excise taxes

Which Republicans also mostly oppose, as evidenced by the drum-beat of protectionist rhetoric coming from the left as the right has stopped championing globalization.

and, most significantly, payroll taxes on every dollar they earn.

Of course, this is for things like unemployment insurance and Medicare—systems that unabashedly favor the poor. (Social Security is somewhat of an aberration due to the lower life expectancy of the lower class).

These taxes are regressive.

Technically, yes, these taxes are regressive due to income elasticity, but the rich still generally pay vastly more than the poor in sales-related taxes. What’s more, there are good arguments to be made for regressive tax policy at the upper end of the spectrum.

Everyone pays the same share, regardless of income, so they hit the poor hardest,

Did anyone else’s head just explode? Because everyone pays the same rate, the poor get hurt. Now I just want to punch a hobo.

and they counterbalance the progressivity of the income tax code.

They might not be equivalent to the progressivity to the income tax, but they certainly don’t counterbalance it. Let’s not forget that the income tax is the primary vehicle for taxation in this country, and by a yawning margin.

Indeed, factoring in payroll taxes alone, the Slacker Nation picture looks very different.

It really doesn’t. But even so, it completely misses the point of Perry’s assertion, which is that 51% of the poor taking from 49% of the rich undermines our democratic institutions.

Two-thirds of the households that pay no federal income tax still ante up for payroll taxes. Fewer than one in five — 18 percent of all households — pay neither income nor payroll taxes.

Categorize that as another “holy shit, really?” statistic. Yes, it’s that high.

Nearly all of these are elderly (10 percent) or have incomes below $20,000 (7 percent.) Assuming that Perry isn’t worked up about Slacker Grandmas, the relevant “slacker share” — people who are supposedly comfortably ensconced on that wagon the rest of us are pulling — is in single digits rather than “nearly half.”

Oh, because being old or poor means you don’t really count in this scenario. Also, let’s not count the people who only pay nominal fees for systems that are designed to disproportionately benefit the poor. Anyone else you want to exclude? Transients? Criminals? Do-gooder Artists?

Those are an awful lot of assumptions, and, frankly, they’re all irrelevant, because they amount to the same thing. Through tax policy, we have incentivized all of these carefully parsed constituencies to failure. Seventy years of progressive policies advocating higher taxes on the rich and increased  government spending have resulted in that have lit the fuse on a ticking time bomb of economic malaise.

And, of course, they pay other taxes. An analysis by the Congressional Budget Office, taking into account all federal taxes, found that in 2007 even the poorest one-fifth of households, with average income (including government benefits) of $18,400, paid 4 percent of their income in federal taxes. By contrast, the middle fifth (average income $64,500) paid 14 percent of income and the top fifth (average income $264,700) 25 percent.

Whoa whoa whoa! I thought you said that the progressivism of the income tax was counterbalanced by the regressivism of sales, excise, and payroll taxes. Can I chalk that one up as a bald-faced lie?

In short, the wealthy pay a greater share of their income in taxes — but the poor don’t, as Perry implies, pay nothing.

Again, that wasn’t the implication. Indeed, he made a particular point of specifically saying “income taxes.” Go back and read the quote. You decided to start the article with it! YOU chose the quote. You can’t make up a subtext and argue against your own made-up subtext. Well, at least not if you frown on argumentative masturbation.

About those rich people: Perry seems to believe it is wrong to ask more of them.

It is.

 “ ‘Spreading the wealth’ punishes success while setting America on course for greater dependency on government,” he said.

It does.

Perry needn’t worry. In the past several decades the wealth hasn’t been spread so much as concentrated — at the top.

Christ, she couldn’t miss the point more if she were blindfolded. The argument Perry makes is that tax policy undermines the free market and enforces inefficiency. A large economic disparity is the natural and inescapable result of liberal economic policies that promote corporatism instead of capitalism.  Entitlement spending keeps the poor poor and government interventionism keeps aggregates massive sums of money in the pockets of the politically connected.

The share of total income going to the top 1 percent of income earners more than doubled from 9 percent in 1970 to 23.5 percent in 2007. (The Great Recession has since narrowed the gap.)

Again, completely predictable product of liberal policies.

And while, as noted above, the rich pay a greater proportion of their income in taxes,

You mean to say, “the rich pay a ridiculous amount more money than the poor in taxes.”

the share of total taxes paid by the richest Americans is commensurate with their share of national wealth.Examining the total tax burden — state, federal and local — Citizens for Tax Justice

Which is a progressive group, meaning that their numbers are pretty much trash because liberals don’t really believe in math.

calculated that the top 1 percent of households (average income, $1.3 million) earned 20.3 percent of income and paid 21.5 percent of taxes in 2010.

Which is, of course, an idiotic metric, as the measure of fairness is how much you put in versus how much you get out. Even if you want to judge income as “getting something out” of the investment in government—which no sane person should—it completely ignores anything about direct cash disbursements through various social spending programs, or even about investment benefits from things like military expenditure.

Indeed, the term progressive is designed to indicate that it means a transfer of wealth from rich to poor. It’s not a code word, or reading into the subtext. It’s overt. Arguing that the government doesn’t favor the poor over the rich with tax policy is just a flat lie. Indeed, the entire verbiage of the tax debate hinges on language that indicates that tax policy favors the poor.

The tax code is studded with a costly bevy of deductions and preferences — mortgage interest, employer-sponsored health insurance, retirement savings — that benefit wealthier taxpayers over those with modest incomes.

Of course it is. It’s not because they’re good for the economy. It’s because politicans use them to curry favor with very specific constituencies. Liberal politicians pick the constituency to coddle, and Republicans go along because any decrease in taxes is at least a step towards sanity.

If Perry wants to go after injustice in the tax code, he’ll find ample targets. Failing to tax poor people enough isn’t among them.

You still haven’t addressed the point of Perry’s argument about injustice, which is that it is immoral to have citizens that can vote but who don’t have skin in the game. And no, an effective tax rate (with payroll taxes) of 4% is not having skin in the game.

(Of course this article did have the added bonus of providing the liberal argument that the tax code is essentially fair, which means that raising taxes only on the rich would be inherently unfair because it unbalances Ruth’s carefully constructed see-saw.)

But even Perry misses the more fundamental truth. Our tax code is the subject of these ridiculous inquests because taxing income is downright stupid. Taxation is equivalent to disincentivization. As a result, we are disincentivizing income. If that sounds crazy to you, congratulations, you’re less crazy than Congress (which is kind of like being the skinniest guy in a Twinkie-eating contest.) In this age of high debts, what should we be taxing? Consumption. Get rid of the income tax, implement a national sales tax at ~20% (give or take a few points) on final goods, exempt necessities like food and rent, and call it a day. No more IRS. No more tax accountants. No more April 15. Incomes would shoot up by 20-25% (so would prices of final goods) and we would encourage more savings, thereby reducing the impact of recessions on personal economies. I’m telling you, consumption tax is where it’s at.

I have solved the world’s taxation problems and ridiculed Ruth Marcus in the process. It’s been a good day.

Cohen's Ode to Incoherence

Green with Tea Party envy

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By Richard Cohen, Monday, August 1, 6:59 PM

I suffer from Tea Party envy.

Aptly phrased—as though it were a psychological condition straight out of the DSM-IV.

There is little about the actual party I like and there are some members I abhor, but I am jealous of its sense of purpose, its determination and its bracing conviction that it is absolutely right.

Thank you. Now please end the column here before you begin embarrassing yourself.

In its own way, it waves a crimson battle flag while President Obama’s is a sickly taupe — the limp banner of an ideological muddle.

And here’s where it just gets silly. Obama is an ideologue. He always has been. The difference between Obama and the Tea Party is that ordinary Americans don’t recoil in horror when they hear about Tea Party values. Indeed the Tea Party wears its values on its sleeve; Obama guards his ideology more closely than his close friendships with domestic terrorists.

Obama would be a good White House chief of staff,

No. He wouldn’t. Even that position is vastly more managerial experience than he had prior to taking office. This is a man who has been told his entire life that he was incapable of failing. Now that the stakes are high, it’s why he is incapable of succeeding.

but as a president he lacks political savvy.

You want to know why the Tea Party has the passion that it does? It’s because we don’t blame our leaders’ failings on a lack of savvy.

He never knew how to get ahead of the Tea Party wave.

That would have been quite the feat, seeing as he was the one who created it.

He never knew how to marshal — or create — his own constituency. Republican invective notwithstanding, he lacks demagogic tools.

Hilariously, this comes in the same week that the Vice President of the Untied States and multiple members of both houses of Congress have called Republicans (and specifically Tea Party Republicans) terrorists, hostage-takers, and seditious. With all due respect, blow it out your ass, Richard.

Also, how would “Republican invective,” even if it’s all in Cohen’s addled mind, evince the absence of Obama’s demagogic tools? That sentence doesn’t make any sense.

He tries to solve problems instead of, for the Republicans, creating them.

Again, this sentence doesn’t make any sense. It’s as though he’s just sneezing out arbitrary prepositions. Despite being a the grammatical equivalent of Priscilla Presley’s misadventures in cosmetic surgery, I can still say with relative certainty that the sentiment that it’s groping to express is also flat-out wrong. Anyone with half a brain can see that the debt crisis was entirely created by Obama. Even Jim Cramer thinks so, indicating that absent half a brain, anyone with an extensive array of props and sound effects can also see to Obama’s colossal ineptitude.

Barack Obama does not do pain.

Please. Only Clubber Lang “does pain.”

Still, Obama came to the White House at a tough time for a Democrat.

A 78 seat majority in the House, filibuster-proof majority in the Senate, a jubilant and self-congratulatory electorate, and an economy that had just about bottomed out under his predecessor? A president couldn’t possibly walk into a better situation.

Washington has gone topsy-turvy.

I know. President Obama’s stalwart cadre of media guardians are now trying to ply the revised history that Obama walked into a bad situation. The world certainly has changed in three years.

The liberal party, the Democrats, has turned conservative.

No. The electorate simply demanded that they stop the lunacy last year. And let’s not forget that they want to raise taxes in between recessions. (Yes, double-dip is coming.)

Its lawmakers want to conserve Social Security and conserve Medicare and conserve myriad other programs that have turned into patronage plums for important constituencies.

In other words, “why not bankrupt the country if it keeps getting me elected?”

The Republicans of the Tea Party, on the other hand, say they are conservatives, but they are really radicals — maybe even nihilists.

Why would Obama have to demagogue when you do it so cravenly for him?

They would rather destroy than compromise.

This is the liberal trap. By accusing conservatives of destruction, conservatives have one of two choices: 1) refute that a 10% decrease to a baseline that increases by 15% can, under no definition of the word, be described as destruction and thereby alienating the right with their timidity, or 2) admit that we do want to destroy wasteful and ineffective government programs, thereby alienating independents, who are generally the dumbest voters this side of a middle school class treasurer election.

They are drunk on bromides about Big Government and Small Business and the virtues of a balanced budget, no matter what damage all that does to an already sick economy.

Here is what Cohen simply can’t understand: we genuinely believe that large government corrupts and taints the economic liberty that serves as the lifeblood of the economy. We never believed that the government can grow the economy.

In another era, folks with this mentality would be yelling “Power to the people”

You pitiable little dullard. Advocating for limited government is advocating for the power of the people.

or some such thing, because a good slogan is more persuasive than careful analysis any day.

Because we aren’t mindless zealots, the Tea Party doesn’t actually have a slogan. “Taxed Enough Already” is a name origin that is still less often echoed than the homoerotic “teabagger” vulgarities of Jon Stewart and his self-loathing ilk. Indeed, conservatives never have good slogans, whereas everything liberals say is some derivative of “we’re here, we’re queer, get used to it.”

You can, as they say, look that up.

That’s also not a slogan.

Obama is the president of political ennui. I say this out of empathy. He is like many of us, post-ideological.

Please. Don’t blame the President’s ineptitude on “political ennui.” If he was that bored with the process, he shouldn’t have spent two years begging America for the job. The reason that he did is that he isn’t bored. He does believe in a hard-left agenda. He’s not post-ideological and neither are you.

The rousing causes of yesteryear have faded — civil rights, voting rights, women’s rights and the antiwar fervor of the Vietnam era. Even gay rights has lost its urgency.

True. Conservatives moved beyond all of these issues in the 70s, when they were actually put to bed. Liberals have been throwing haymakers at ghosts for 30 years.

Gay people get elected to public office and can marry in certain states. The outcome of this fight is not in doubt.

Gay rights is the ultimate irony of liberal lunacy. Liberals want gays to be able to marry. Why? It’s not about equality. If that were the case, gay Americans and sympathizers to the cause would have started their own churches and married each other. Yet they haven’t—at least not in any significant number. Over the last fifty years, liberals have quilted a patchwork of government benefits to married couples made possible by the existence of the expanded role of government. Had government truly been limited, the only thing keeping gays from equal rights fifty years ago would have been their pastor. The political remedy for a recalcitrant clergy is simply changing churches. It would have taken about ten minutes and a Sunday morning whim. Instead, what was the political remedy for fixing the perceived inequity in big government? Thirty years of squandered political activism. The corruption of the Civil Rights movement.  Absurd curriculums for school children about androgynous kangaroos or Suzie trying to figure out how she came out of two vaginas simultaneously. And. most tragically, the permanent degradation of the gay community into the pet victims of the Democratic Party. Conservatives aren’t, for the most part, aghast at the idea of a man holding hands with another man. We resent the idea that our government is the one forcing to acknowledge this and that the unavoidable gravity of political correctness is pulling us to preface our objections with “it’s cool that you’re gay, but…”

Obama’s slogan was “Change.”

Technically, he had a bunch of slogans. “Yes we can.” “Change we can believe in.” “Please don’t ask Joe Biden any questions.”

It was supposed to suggest no more politics for the sake of politics. No more special-interest legislation. No more bridges to nowhere. But ever since the New Deal, the Democrats have been the party of programs.

Which is to say, Democrats are the party of special-interest legislation. Democrats are the party of bridges to nowhere and government-sponsored cowboy poetry, and federally-funded cocaine binges for monkeys.

They spend money,

Even when they don’t have to.

and now there is really no money to spend. For the Democrats, this is a considerable challenge. They are empty of political innovation.

This is actually a pretty stunning acknowledgement that liberals don’t know how to govern without massive deficit spending. Beyond that, it also acknowledges that every area where government could reasonably expand to has already been expanded to.

The Tea Party is not. It knows precisely what it wants to do. It stands in shimmering contrast to Obama, who seems vaguely at a loss.

These are the refreshing moments where he gropes for clarity. It’s like watching a baby take its first steps.

He had ideas galore, but they were merely interesting and not powered by ideological passion. He liked. He didn’t love.

And then watching that same baby fall on it’s ass, and wondering, as a parent, if your child’s inability to walk at 5 is somehow your fault.

Afghanistan is the epitome of Obamaism: More troops and then fewer troops and the goal is not to win, just merely to end it so that it does not look like a loss.

Yet more evidence that liberals can not be trusted to protect this country.

It’s a vaporous policy, a war in the spirit of the one waged in Libya, which could have ended by now had the United States not stopped its active participation.

Or not gotten involved at all.

Does he want to win? Does he care about losing? What’s the cause? Obama’s wars lack music.

After listening to the Post’s editorial writers shower praise on Obama for nuance in foreign policy and dismiss comparisons of Libya to Syria as incongruent, it seems now that conservatives were precisely correct in their assessment of Obama’s geopolitical idiocy (and the idiocy of the guilt-ridden lunatics like Samantha Powers that advise him.)

Also, on a more personal note, I was absolutely correct in calling for more political assassinations.

The odd thing about the Tea Party is that it uses Washington to attack Washington. This is a version of Hannah Arendt’s observation that totalitarian movements use democratic institutions to destroy democracy.

Excuse me for a moment; my head just exploded.

How the hell can an ideology of smaller government be totalitarian? That’s like saying that vegans are pro-slaughterhouse or that peace protestors are a cog in the military industrial complex.

(This is what Islamic radicals will do in Egypt.)

Have done. As memory serves, conservatives predicted that as well. But then again, we’re talking about Egyptian jihadists and theocrats, not Egyptian libertarians—which don’t exist.

Note that the Tea Party is nowhere near a majority — not in the House and not in the Senate. Its followers have only 60 seats in the 435-member House,

Do you think he knows that the Tea Party isn’t actually a political party? It’s a House sub-caucus of the Republicans, many of whom are sympathetic non-members.

but in a textbook application of political power they were able to use parliamentary rules to drive the congressional agenda.

As opposed to what? Guns? This isn’t Syria. What exactly were you expecting?

As we have known since Lenin’s day, a determined minority is hands down better than an irresolute majority.

Lenin was a Bolshevik you fucktard. Bolshevik, in Russian, literally means majority party. After they purged the Mensheviks, the Bolsheviks stopped being the majority party and started becoming the only party.

The Tea Party has recklessly diminished the power and reach of the United States. It has shrunk the government and will, if it can, further deprive it of revenue.

There’s nothing reckless about it. We want to diminish the power of the federal government domestically. That is a winning electoral argument. You know how I know? Because it won in 2010.

The domestic economy will suffer

For the guy who seems to have not learned anything from Soviet Russia, I’ll take my chances with economic freedom.

and the gap between rich and poor, the educated and the indolently schooled, will continue to widen.

Indolent? How does excessive spending fix laziness?

International relations will lack a dominant power able to enforce the rule of law, and the bad guys will be freer to be as bad as they want.

This is a bad joke, right? This is basically a tacit admission that neoconservative foreign policy was right all along. Someone owes an apology to Donald Rumsfeld (among others).

Maybe the deficit will be brought under control, but nothing else will.

By the criteria Cohen sets out (profligate federal spending and a hyperaggressive foreign policy), George W. Bush was the best president since Lyndon Johnson.

I worry — and I envy (but will not forgive) those who don’t.

Somebody get this neurotic fruitcake a yoga mat. I’m worried he’s going to have an embolism right here.