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Old 07-11-2011, 12:14 PM   #61
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Originally Posted by youbet View Post
I understand you wanting to dance around this Michael, but the fact is that FICA taxes are regressive in the sense that folks who earn above the max taxable limit pay a smaller percentage of their total income. But it turns around at payout time when SS pays low income folks a much, much higher percentage of their lifetime income as a benefit.

I'm not against that in any way. But, it is the way it is. SS, as it stands today, is a good deal for low wage earners vs. high wage earners. And appropriately so IMHO.

It's inaccurate and misleading to think of FICA and SS as regressive.
A tax assessed on the first xx$ of income and none thereafter is regressive. It falls into the category of a lower rate as income increases.

I'm unsubscribing this thread and moving on.
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Old 07-11-2011, 03:10 PM   #62
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Originally Posted by GregLee View Post
You've given two definitions of "regressive tax" which, as you've shown, are inconsistent. They define different things. I understand how two definitions can be inconsistent. I still don't understand how a definition can be inconsistent.
OK, so technically, as youbet says, it is the two definitions for a single term that bring on the inconsistency. And it leads to the problem I mention -one word meaning different things in very similar context muddles things. It's a lot more muddled than pointing to a bottle of Scotch and asking someone if they'd like a shot versus pointing a gun to their head and asking them if they'd like to be shot.

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Originally Posted by youbet View Post
I think what's being talked about is two different difinitions of the same term being used in the same context.

I share ERD50's POV that "regressive" and "flat" are used inconsistently. And I think this is explained beautifully by Ha in post #55.

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Isn't the point of political speech to be inaccurate and misleading?

Ha
It seems to be one of the few things the excel at! Labeling Electric Cars 'zero pollution' and on and on....

-ERD50
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Old 07-11-2011, 03:24 PM   #63
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Originally Posted by MichaelB View Post
A tax assessed on the first xx$ of income and none thereafter is regressive. It falls into the category of a lower rate as income increases.

I'm unsubscribing this thread and moving on.
Yes, yes, I know you are moving on, but you've so clearly outlined the issue for me that I want to use it to show how it leads to confusion. I'm not posting this as a "win" as some might want to think, but just to demonstrate how confusing the terms are when used selectively.

In the above post, you are declaring FICA to be 'regressive' because it is levied that way. Fine. But you discount youbet's claim that the overall result is not regressive when he points out that the payments are progressive.

In the below post, you argue the opposite. Sales taxes are levied as a flat tax, but you say they are 'regressive' because the (usual) end result would make them regressive.

It's just not consistent - we either stick with the terms applied to how the tax is levied, or we stick to the overall result. We can't credibly pick and choose for different cases and claim it's apples-to-apples.



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Sales tax is generally considered regressive because lower income people spend a larger portion of their total incomes, and therefore have a higher effective rate.

-ERD50
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Old 07-11-2011, 03:47 PM   #64
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Originally Posted by ERD50 View Post
Yes, yes, I know you are moving on, but you've so clearly outlined the issue for me that I want to use it to show how it leads to confusion. I'm not posting this as a "win" as some might want to think, but just to demonstrate how confusing the terms are when used selectively.

In the above post, you are declaring FICA to be 'regressive' because it is levied that way. Fine. But you discount youbet's claim that the overall result is not regressive when he points out that the payments are progressive.

In the below post, you argue the opposite. Sales taxes are levied as a flat tax, but you say they are 'regressive' because the (usual) end result would make them regressive.

It's just not consistent - we either stick with the terms applied to how the tax is levied, or we stick to the overall result. We can't credibly pick and choose for different cases and claim it's apples-to-apples.






-ERD50

Since MichaelB moved on.... I will put down an answer for this (not what I think mind you, just so there is an answer)


He was talking about the tax... not the net benefits.... the tax is regressive to poorer people than richer people after you get above the limit... Now, you might say this is a 'flat tax' up to that point, but as some have argued the result to a group is not flat....

Also, he might not GET that return later in life (heck, I am not going to)... IOW, even if you look at the program for the whole lifetime of a group of poor, it still might be regressive in the global sense (the rich vs poor).... especially the very rich.... I don't think that you can say for sure the net is progressive....
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Old 07-11-2011, 03:56 PM   #65
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This wasn't addressed to me, but I want to throw in my two cents.

The FICA tax is regressive. SS's payouts are progressive. They are two different things. You can say that FICA's regressive nature is justified by the progressive payouts of SS (its a very valid point of view), but it doesn't change the fact that FICA is a regressive tax.

The idea that FICA and SS are really separate from the rest of the budget is pretty much bull, IMO. FICA has been subsidizing non-SS spending for decades. People like to pretend that the two are truly linked, but ultimately FICA is just one of many taxes and SS is just one of many government spending programs.

The government just temporarily reduced FICA as part of the tax cut deal the R's and Obama made. Did that include any cut in benefits? Nope. It's all just one big slush fund. Having the government put money in different pockets pretending that they are separate is just smoke and mirrors.

My point at the start of this was just to point out that the total tax picture is not as wildly progressive as the people pointing at just income taxes make it seem.

Lower income people as a group generally pay a larger portion of their incomes in sales taxes, property taxes, user fees, and FICA. Income taxes are progressive in part to counteract this fact.

I really don't think any of this is particularly controversal.

Quote:
Originally Posted by ERD50 View Post
Yes, yes, I know you are moving on, but you've so clearly outlined the issue for me that I want to use it to show how it leads to confusion. I'm not posting this as a "win" as some might want to think, but just to demonstrate how confusing the terms are when used selectively.

In the above post, you are declaring FICA to be 'regressive' because it is levied that way. Fine. But you discount youbet's claim that the overall result is not regressive when he points out that the payments are progressive.

In the below post, you argue the opposite. Sales taxes are levied as a flat tax, but you say they are 'regressive' because the (usual) end result would make them regressive.

It's just not consistent - we either stick with the terms applied to how the tax is levied, or we stick to the overall result. We can't credibly pick and choose for different cases and claim it's apples-to-apples.






-ERD50
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Old 07-11-2011, 04:32 PM   #66
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Originally Posted by Hamlet View Post
My point at the start of this was just to point out that the total tax picture is not as wildly progressive as the people pointing at just income taxes make it seem.

Lower income people as a group generally pay a larger portion of their incomes in sales taxes, property taxes, user fees, and FICA. Income taxes are progressive in part to counteract this fact.

I really don't think any of this is particularly controversal.
I agree with all that, and I'd view it as factual not opinion (I might remove the adjective 'wildly' to keep it factual, since that's somewhat subjective), so it should not be controversial at all.

I just took a tangent there with the usage of the word 'regressive', I didn't mean that I disagree overall with the concept.

The whole FICA in/out thing can be viewed many ways, as can who gets the most 'benefit' from general taxes. I'll just say it isn't clear cut one way or the other.

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Old 07-11-2011, 05:28 PM   #67
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Originally Posted by ERD50 View Post
Yes, yes, I know you are moving on, but you've so clearly outlined the issue for me that I want to use it to show how it leads to confusion.
You give a novel definition of "regressive tax" which is inconsistent with the conventional definition, then complain about the confusion this causes. But you're the one who caused the confusion. The remedy is to not give a new definition that is inconsistent with the old. The discussion was about taxation, and now you seem to want to apply the terms regressive and progressive to SS benefits. Is that confusing? -- yes, a little. But whose fault is that? Let's avoid the confusion by not trying to apply the term "regressive tax" to benefits, since benefits are not taxes.
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Old 07-11-2011, 08:32 PM   #68
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This seems pertinent:

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Nearly all the metropolitan areas whose economies suffered the least since the start of the Great Recession had increases in government employment, while most of those that suffered the most lost government jobs. Seventeen of the 20 metropolitan areas that have had the strongest overall economic performance since the start of the recession (all except Augusta, Buffalo, and Columbus) gained government jobs since their periods of peak total employment. Fourteen of the 20 that had the weakest overall performance (all except Bakersfield, Boise, Cape Coral, Jacksonville, Lakeland, and Tampa) lost government jobs since hitting their total employment peaks.
http://www.brookings.edu/~/media/Fil...ro_monitor.pdf

Presumably these local economies are impacted when more or less govt. workers are employed and able to spend, contribute to the local economy.

Moreover, these govt. employees affect certain local businesses -- restaurants, retail stores, various service businesses, etc. -- so as the number of govt. employees increase or decrease in a locality, the number of private workers in these dependent businesses will go up or down.


The other thing is that the politicians calling for reducing the size of govt. claim that private businesses will rise up and replace these lost govt. jobs, in fact exceed them.

There seems to be little evidence of that so far if the linked report is accurate or else the level of govt. employment in a community should have little or no bearing on overall employment or economic activity.
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Old 07-11-2011, 11:31 PM   #69
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Originally Posted by explanade View Post
This seems pertinent:



http://www.brookings.edu/~/media/Fil...ro_monitor.pdf

Presumably these local economies are impacted when more or less govt. workers are employed and able to spend, contribute to the local economy.

Moreover, these govt. employees affect certain local businesses -- restaurants, retail stores, various service businesses, etc. -- so as the number of govt. employees increase or decrease in a locality, the number of private workers in these dependent businesses will go up or down.


The other thing is that the politicians calling for reducing the size of govt. claim that private businesses will rise up and replace these lost govt. jobs, in fact exceed them.

There seems to be little evidence of that so far if the linked report is accurate or else the level of govt. employment in a community should have little or no bearing on overall employment or economic activity.
Of course, you can get almost 100% employment, as in the old USSR, just by having the government employ everyone.

Ha
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Old 07-12-2011, 01:23 AM   #70
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Let's avoid the confusion by not trying to apply the term "regressive tax" to benefits, since benefits are not taxes.
So far you're the only one to apply the term "regressive tax" to benefits GregLee. So, yes, please stop doing so.
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Old 07-12-2011, 02:21 AM   #71
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I don't have any hard evidence, just an observation that the better-funded candidates win more elections. Do you really think that the parties would spend all that money if it didn't sway voters?
This was discussed (IIRC) in the book "Freakonomics". The conclusion is that winning candidates tend to spend more, but mainly because people give money to candidates whom they consider likely to win. This makes sense, because of course most donations, and certainly most large donations, are made in order to be able to call in a favour later, and a losing candidate is less likely to be in a position to do that. (One of the unique things about Obama's presidential campaign was that so many people gave $10 or $20 and were thus unlikely to expect largesse in return.)
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Old 07-12-2011, 09:21 AM   #72
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IMO, the issue is less about the *number* of government jobs or even the pay and benefits of those jobs, but of the ability of the private sector to continue to be able to afford to pay for it. If the private sector were strong and flourishing, and wasn't spending the last 10 years increasing unemployment and cutting real wages, we may not even be having this discussion.

The best way to keep anything close to the current level of government employment feasible is to reverse the erosion of the middle/working class private sector (non-executive) employment deal which is steadily getting worse. Regardless of what we want and what we think is right, there is no way we can NOT significantly cut the number of public sector jobs if private sector employment continues to shed jobs and cut real wages. So to that end, to those fighting the fight in Wisconsin and elsewhere, I'd merely say: if you want to keep the deal you've been getting, you have to stop looking the other way while the rest of us continue to lose ground due to higher unemployment, merger activity, automation and offshoring of jobs (all of which put upward pressure on unemployment and the pool of job seekers, and downward pressure on wages and benefits). There's no way we can give you what you want -- even if we wanted to -- if our survival is looking increasingly tenuous. People are more generous when they feel secure and prosperous -- not when their wages are falling and they feel a pink slip can come at any time.
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Old 07-12-2011, 07:31 PM   #73
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most donations, and certainly most large donations, are made in order to be able to call in a favour later, and a losing candidate is less likely to be in a position to do that. (One of the unique things about Obama's presidential campaign was that so many people gave $10 or $20 and were thus unlikely to expect largesse in return.)
I think the vast majority of those donating 10 and 20 were expecting "Hope" and "Change" in return.
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