Redistributing Wealth

[quietman]

Newscoverage of the election is heating up (as if that were even possible) and the new line to attack Obama is "redistributing wealth" implying that his agenda is socialist or worse because of his tax policy of raising rates on higher incomes and lowering rates on lower incomes.

But wait - isn't that exactly what out current income tax does. Where's the news? Obama is proposing a slight shift in rates, up at the top end, down at the low end. I don't see what all the hoopla is about over this.

Now, if he was proposing a new tax on assets, THAT would be a real redistribution of wealth, and cause for this kind of alarm. But getting this kind of coverage and hyperbole out of fiddling with rates from 36% to 39% shows how little real substance is being debated. It's a battle of the spin that can be put on minor points.

[dex]

Originally Posted by quietman

But wait - isn't that exactly what out current income tax does. Where's the news? Obama is proposing a slight shift in rates, up at the top end, down at the low end. I don't see what all the hoopla is about over this.

No it isn't the same. - Taxes are levied to fund the needs of the government as approved by the people and the congress. "Spreading the wealth" is a concept that does not have a precedent in the current law.

Also, the total tax system is less progressive when you look at only the income tax aspect.

Corporate taxes are in everything purchased by citizens, no matter the income level.

The same X% corporate tax rate is in a loaf of bread or gallon of gas for the rich or poor.

[FIRE'd@51]

I think the "redistribution of wealth" argument comes from the fact that Obama wants to give that money to many folks who don't pay income tax in the form of a refundable tax credit.

[ERD50]

quietman - I think it's just a matter of degrees. Plus, with McCain behind in the polls he's got to go after something. I gather their research says this is having the best results. No comment from me on the good/bad of that, I'm just saying'.

Originally Posted by dex

Corporate taxes are in everything purchased by citizens, no matter the income level.

The same X% corporate tax rate is in a loaf of bread or gallon of gas for the rich or poor.

I'd love to see a well done survey performed to determine what % of people who support progressive taxation also support higher corporate taxes. I suspect you would see a strong correlation. Even though it makes zero sense.

That's why I'd like to see debates handled in the manner I suggested on another thread - have experts lay out the facts ahead of time, and then have the debate. It would be a lot tougher for the candidates to make claims contrary to what is known to be true, as they do today (on both sides).

-ERD50

[Midpack]

Originally Posted by FIRE'd@51

I think the "redistribution of wealth" argument comes from the fact that Obama wants to give that money to many folks who don't pay income tax in the form of a refundable tax credit.

I also think this is at the heart of the current "discussion." It's one thing to pay higher taxes than others, it's something else to give it to people who pay no income taxes to begin with (regardless of other "taxes" low income folks may pay). Right or wrong, the latter would legitimately seem much closer to socialism than progressive tax rates alone.

[ERD50]

I forgot to mention, there was a great discussion on this on NPR's "To the Point" (the podcast is available).

One of the guests pointed out that even a 100% flat tax is still a "redistribution of wealth". The only thing that qualifies as not being a redistribution would be a "head tax". Every single individual (maybe of voting age or whatever), pays the exact same *amount*.

I'm not saying that any of that is good, but I found it interesting to add perspective to the discussion. It's obvious in a way, but overlooked, I think.


-ERD50

[USK Coastie]

No Obamma wans to redistribute your wealth to pay for his Aunt who is living in the US illegally to live in the south Boston Public Housing. He would not dare think of using any of his millions to help her or to sponsor her as a relative of a US Citizen to get a green card.

[growing_older]

I think the "redistribution of wealth" argument comes from the fact that Obama wants to give that money to many folks who don't pay income tax in the form of a refundable tax credit

I've been watching the campaign ads and I saw the Obama infomercial. I don't remember seeing an argument that he wants to raise taxes on top earners to provide a new kind of "free money" to non-earners. I heard it would balance the rate reductions for lower earners. But I never noticed an expansion of the "earned income credit" or any new plan to give money to non-taxpayers. Anyone know how big this giveaway is planned to be? Is it really in the plans? I don't remember seeing it, but there's so much material floating around I could have missed it. Details anyone?

[dex]

Originally Posted by growing_older

Anyone know how big this giveaway is planned to be? Is it really in the plans? I don't remember seeing it, but there's so much material floating around I could have missed it. Details anyone?

I'll take what I can get. There is talk about another "Tax rebate".

[OAG]

Free Money - Vote for us! Some may call it cynical but.... I do not have a problem helping those that CAN'T - my problem is helping those that WON'T.

[audreyh1]

The Earned Income Tax Credit - a major plan for wealth redistribution via the tax code:

Originally Posted by wikipedia

Enacted in 1975, the initially modest EIC has been expanded by tax legislation on a number of occasions, including the more widely-publicized Reagan EIC expansion of 1986. The EIC was further expanded in 1990, 1993, and 2001 regardless of whether the act in general raised taxes (1990, 1993), lowered taxes (2001), or eliminated other deductions and credits (1986). Today, the EITC is one of the largest anti-poverty tools in the United States (despite the fact that most income measures, including the poverty rate, do not account for the credit), and enjoys broad bipartisan support.

Ford, Reagan, Bush Sr., Clinton, Bush Jr.

[Independent]

Originally Posted by FIRE'd@51

I think the "redistribution of wealth" argument comes from the fact that Obama wants to give that money to many folks who don't pay income tax in the form of a refundable tax credit.

Right. Here's a WSJ editorial. Obama's 95% Illusion - WSJ.com

I think it's also fair to point out that McCain wants to do a refundable credit for medical insurance ($2,500 per person or $5,000 per couple), but the WSJ doesn't do that.

I'm in favor of progressive tax rates. I also think there are times when we should send checks to "poorer" people. It even makes sense to use the FIT system to send those checks (e.g. EITC).

But, I don't like using the phrase "tax cut" to describe a situation where we would be increasing the size of the checks we send to people who don't pay FIT. Call that "expanded EITC" if you want, or "welfare" if you prefer, but calling it a "tax cut" seems misleading.

[eridanus]

Originally Posted by USK Coastie

No Obamma wans to redistribute your wealth to pay for his Aunt who is living in the US illegally to live in the south Boston Public Housing. He would not dare think of using any of his millions to help her or to sponsor her as a relative of a US Citizen to get a green card.

A US citizen can't sponsor an aunt, cousin, uncle, or grandparent.

[dex]

Originally Posted by Independent

I'm in favor of progressive tax rates. I also think there are times when we should send checks to "poorer" people. It even makes sense to use the FIT system to send those checks (e.g. EITC).

Giving money to the poor to use as they wish? Shouldn't it be focused on helping them get out of poverty - Job training for which there are programs in place.

What new programs are needed to help the poor that we do not have in place?

The only one I would can think of is CCC as there was in the depression.

But, just giving money to them; what problem does that address that is not addressed in other programs.

Who is poor?

Has poverty changed over time?2

In the late 1950s, the overall poverty rate for individuals in the United States was 22 percent, representing 39.5 million poor persons. Between 1959 and 1969, the poverty rate declined dramatically and steadily to 12.1 percent. As a result of a sluggish economy, the rate increased slightly to 12.5 percent by 1971. In 1972 and 1973, however, it began to decrease again. In 1973, the poverty rate was 11.1 percent. At that time roughly 23 million people were poor.
In 1975 the poverty rate increased to 12.3 percent. It then oscillated around 11.5 percent for the next few years. After 1978, however, the rate rose steadily, reaching 15.2 percent in 1983. Thereafter it remained mostly higher than 13 percent. In 1993 it reached a new high of 15.1 percent, and then began to fall slowly. In 2000, 31 million people were poor (11.3 percent of the population). In 2001 the number of poor and the poverty rate both rose as economic difficulties moved into recession, and the rate continued to rise; in 2003, 35.8 million people were poor by the official measure of poverty. By 2005, the number had risen to 37 million people (12.6 percent of the population). After a slight decline in 2006, in 2007 37.3 million people were poor (12.5 percent of the population).

[youbet]

Originally Posted by Independent

I also think there are times when we should send checks to "poorer" people. .

You betcha! DW and I provide fairly significant financial aid to DW's mom (84 yo) who is trying to live on $13k/yr SS. To whatever extent Barack Obama is successful in getting addtional funds to her, it will be money in my pocket! Dollar for dollar! Hard not to like that!

[dex]

Originally Posted by youbet

You betcha! DW and I provide fairly significant financial aid to DW's mom (84 yo) who is trying to live on $13k/yr SS. To whatever extent Barack Obama is successful in getting addtional funds to her, it will be money in my pocket! Dollar for dollar! Hard not to like that!

I have a better plan for my 89 y/o mother when her money runs out.

Take her to D.C. and give her a ticket for a tour of the White House; tell it is her new retirement home and leave her there.

[youbet]

Originally Posted by dex

I have a better plan for my 89 y/o mother when her money runs out.

Take her to D.C. and give her a ticket for a tour of the White House; tell it is her new retirement home and leave her there.

And I'll be proud to know that a few pennies of my tax money is going to put that deluxe roof over your mom's head! You help pay for my MIL, I help pay for your mom. All for one, and one for all! This is gona be great!

[Independent]

Originally Posted by dex

Giving money to the poor to use as they wish? Shouldn't it be focused on helping them get out of poverty - Job training for which there are programs in place.

What new programs are needed to help the poor that we do not have in place?

The only one I would can think of is CCC as there was in the depression.

But, just giving money to them; what problem does that address that is not addressed in other programs.

I didn't intend to say that I wanted to have some big new programs.

When we send checks to "poor people" today, we usually expect they are either: unable to work, participating in some job training activity, or currently working (and we're supplementing their low wages). The alphabet soup I'm thinking of is SSI, TANF, and EITC. I don't think we send a lot of checks to able bodied people who simply decide to stay home. Maybe I'm missing some big program out there, I can't claim that I've chased down all the statistics.

(IIRC, when we replaced AFDC by TANF we roughly halved the number of people in that program by saying you either need a long term disability, or you need to be in a job program, to get benefits.)

[ladelfina]

Notably absent from the WSJ article is the tax hike that people would pay on their employer-provided health insurance under McCain's plan, to be treated as personal income. For that large group of workers, the credit would appear to end up going largely towards offsetting that.

The media always seem to leave out the taxation side when they discuss that proposed credit.. "oops!"

--
dex, sounds kinda like the Russian revolution.. you wanna start housing impoverished oldsters in the "tsar's" palace??!?

[youbet]

Originally Posted by ladelfina

Notably absent from the WSJ article is the tax hike that people would pay on their employer-provided health insurance under McCain's plan, to be treated as personal income. For that large group of workers, the credit would appear to end up going largely towards offsetting that.

But that makes sense doesn't it? If you're among the lucky that receive employer provided medical coverage, you don't need a tax credit designed to help you pay for an individual health care policy. So, you apply your credit to offset the income tax, smile and go on your way.

If you're among the growing masses without employer provided health care, you take the tax credit and apply it to the costs of an individual policy.

Are you suggesting folks that get a health plan from their employer should be able to "double dip" and also recieve a t