The New Resentment of the Poor: A look at that 50% don't pay income taxes argument.

[a completely inoffensive name]

Link: http://www.nytimes.com/2011/08/31/opinion/the-new-resentment-of-the-poor.html?_r=1&hp

I am too tired right now to type a big thing out. Just read the article and talk about what you think.

[Major Robert Dump]

This is not a new resentment, nor does it present any new arguments.

It's the same as when pro-illegal immigrant people say that illegal immigrants do pay their fair share of taxes.

We all know they pay sales tax. We all know they pay payroll tax. This standard applies to everyone. You make more you pay more, you buy more you pay more.

But when you get to the lower echelon of income, you actually get money back that you did not pay in.

The article conveniently fails to mention that these people are not just getting full refunds, they are getting more back than they paid in by virtue of having less than X income and by making babies thay cannot support. I'm talking thousands of dollars. These are not investment credits, energy credits, healthcare deductions, just full blown credits for making babies and having less than X amount of income which, I might add, is an excellent way of keeping people from working because low income individuals will intentionally cap their income so they can qualify for EIC I know this because when I was in college I did it.

The only positive thing I will say about the child tax credit is that everyone gets it, which the article also fails to mention

[a completely inoffensive name]

This is not a new resentment, nor does it present any new arguments.

It's the same as when pro-illegal immigrant people say that illegal immigrants do pay their fair share of taxes.

We all know they pay sales tax. We all know they pay payroll tax. This standard applies to everyone. You make more you pay more, you buy more you pay more.

But when you get to the lower echelon of income, you actually get money back that you did not pay in.

The article conveniently fails to mention that these people are not just getting full refunds, they are getting more back than they paid in by virtue of having less than X income and by making babies thay cannot support. I'm talking thousands of dollars. These are not investment credits, energy credits, healthcare deductions, just full blown credits for making babies and having less than X amount of income which, I might add, is an excellent way of keeping people from working because low income individuals will intentionally cap their income so they can qualify for EIC I know this because when I was in college I did it.

The only positive thing I will say about the child tax credit is that everyone gets it, which the article also fails to mention

What kind of measures would you set up for those on the lower brackets to prevent poverty but ensure incentives to work? I can't figure out how the two would be compatible. To prevent people from going into poverty, you have to give them some measure of wealth. Then they might just ride that measure of wealth as long as possible. Take it away and now you got extreme poverty again. What can you do?

[HoreTore]

Raise wages.

[a completely inoffensive name]

Raise wages.

Well then you got a bunch of people saying jobs would disappear because we are not competitive anymore.

[HoreTore]

Well then you got a bunch of people saying jobs would disappear because we are not competitive anymore.

I don't see why their opinion matters.

[Major Robert Dump]

It is not the governments job to prevent people from living in poverty. People are not born with a right not to be poor. This is the issue, this is where there is disconnect. By virtue of being popped out of a vagina in the USA or anywhere else one is not gauranteed a comfortable life.


The poorest people in this country live better than the middle class of most others, and in some case, the rich. The standard for measuring poverty in this country is ever-changing and is greatly affected by various regional variants, yet this is often not talked about in national discussions of the poor and instead a national standard is applied. In certain rural Oklahoma communities, families can actually live comfortably on less than 18k per year yes by city comparison they would be poor.

I am not some jerk who thinks poor people get what they deserve or that it is always their own fault they are poor. The government should act as a safety net to prevent unnecessary suffering, but not simply an agent to "prevent poverty." While no one denies that poverty is responsible for many social ills, the burden should not fall soley on the government and then we fall into the argument of who deserves what. Should we drug test food stamp recipients? What about corporate welfare recipients? What about Pell grant recipients?

This is the issue: I am American, this is my birth right, I want to be comfortable and have what I want and not have any inconvenience in return.

This is why I am opposed to international humanitarian missions that, rather than focusing on basic needs of human beings and saving lives, frame their missions from the broad perspective of "ending poverty." We will never end poverty. We are animals, and many of us behave as such and just want to eat, drink, poop and sex. Many will choose easy and sustained over hard and very comfortable. If that were not the case there would be no property or fianncial crime, there would be no welfare fraud, and people would not neglect their kids for idiotic things like drugs, social events and XBOX.

I do not want people to suffer, but we as a country cannot logically or feasibly kep every single person out of poverty

[Major Robert Dump]

I actually want to expand on my above post about "My American Birthright means I deserve this" in that I think such attitudes are a result of American Exceptionalism. If that is how we run ourselves on an international stage, if that is how Washington runs the country (rule by exception), then naturally the people at the low end of the totem pole are going to develop a similar mentality just as the slaves adopted a dialect and honor code of the rural south that is still found in the black culture of today.

American exceptionalism is today typically something from the right wing, yet it spawned poor people who don't deserve to be poor. Funny, really.

[a completely inoffensive name]

I don't see why their opinion matters.

What if they are right though?


It is not the governments job to prevent people from living in poverty. People are not born with a right not to be poor. This is the issue, this is where there is disconnect. By virtue of being popped out of a vagina in the USA or anywhere else one is not gauranteed a comfortable life.


The poorest people in this country live better than the middle class of most others, and in some case, the rich. The standard for measuring poverty in this country is ever-changing and is greatly affected by various regional variants, yet this is often not talked about in national discussions of the poor and instead a national standard is applied. In certain rural Oklahoma communities, families can actually live comfortably on less than 18k per year yes by city comparison they would be poor.

I am not some jerk who thinks poor people get what they deserve or that it is always their own fault they are poor. The government should act as a safety net to prevent unnecessary suffering, but not simply an agent to "prevent poverty." While no one denies that poverty is responsible for many social ills, the burden should not fall soley on the government and then we fall into the argument of who deserves what. Should we drug test food stamp recipients? What about corporate welfare recipients? What about Pell grant recipients?

This is the issue: I am American, this is my birth right, I want to be comfortable and have what I want and not have any inconvenience in return.

This is why I am opposed to international humanitarian missions that, rather than focusing on basic needs of human beings and saving lives, frame their missions from the broad perspective of "ending poverty." We will never end poverty. We are animals, and many of us behave as such and just want to eat, drink, poop and sex. Many will choose easy and sustained over hard and very comfortable. If that were not the case there would be no property or fianncial crime, there would be no welfare fraud, and people would not neglect their kids for idiotic things like drugs, social events and XBOX.

I do not want people to suffer, but we as a country cannot logically or feasibly kep every single person out of poverty

God damn it. This is the second post that has gotten me re-evaluating some things tonight. You guys need to limit that to once per week.

[HoreTore]

What if they are right though?

They're not, hence why their opinions are irrelevant.

[Centurion1]

Yes they are. What kind of economic model supoorts your belief that higher wages paid to workers appeal to corporations.............

[Lemur]

[L]ow income individuals will intentionally cap their income so they can qualify for EIC I know this because when I was in college I did it.
You know, I been rich and I been poor, and I never once sculpted my work or my income to fit with the tax code. I don't know anyone who does, besides a few very, very rich people I have known. (I have exactly one billionaire with whom I'm on good terms.)

I'm always suspicious when resentment of the poor is whipped up. There's a lot of anecdotal stuff about welfare mamas driving their Caddy CTS ... dunno. If ever an argument cried out for broad-spectrum data, this is it.

Random thought: If you want to see the worst people at the bottom of the ladder, work in the prison system. If you want to see the best, work in a community college. You would gain a radically different perspective from either.

Most people I've known who are chronically poor have some combination of three elements:

Bad beginnings (broken or nonexistent family, abuse, etc.)
Bad habits (no budgeting, no sense of how much money they actually have, no planning)
Bad brains (chronic mental illness and/or addiction)

Take any two of those three and you've got a marginal person.

Until I see some hard data that involves a large sample of people, I'm going to continue with the conventional wisdom that the EITC has been a very successful system for keeping people off welfare (http://www.chicagonow.com/chicago-muckrakers/2011/03/what-the-heck-is-the-eitc/).

Not every poor person is going to get it together, but I'm in favor of structures and systems that make it as incentivized as possible to climb out of the hole. A self-supporting, tax-paying citizen is ideal, but EITC is superior to and cheaper than welfare, and welfare is superior to and cheaper than prison.

You have to account for the people at the bottom or bad things happen. Read your history. A safety net is, among other things, the insurance policy we property owners and high-earners pay to prevent roaming gangs of people with nothing to lose.

[Fisherking]

This is some electioneering knee-jerk reaction to the discovery that 50% of the population is now too poor to pay income tax.

The old line; it’s the economy stupid! Comes to mind.

There were big job losses when this all started and the country has not recovered.

Increasing taxes on the poor in a recession is the dumbest thing I have heard of in quite a while.

I have no trouble on decreeing business taxes because that is just a tax on the people who need the businesses goods or services. IMO either tax business or tax income but not both.

If we set the taxable limit at $40,000 then so be it. Wait for the economy to improve and this people will be making more and paying income tax.

Everyone pays taxes even if they never file a tax return. Everything you buy is taxed and there are a lot of hidden taxes on everything to boot.

I think they are just going through a demonstration of “How not to get Elected”.

[Major Robert Dump]

@Lemur:

Lets say, according to my yearly wage statement as of November 30, I am currently sitting at 16,500 yearly wages. By December 31 me and my sole job will make 17,500. I am considering taking another job for Christmas money. Doing so will be bump my annual to 18,500, which is 500 over the EIC limit and put me in a higher tax bracket . So for the extra 1000 not only rasies my tax liability by 50 bucks or so, but it also means I lose out of hundreds of dollars in EIC refund. So in the end, I am working a second job for a month for maybe a $200 net gain.

Most of my soldiers will only be taxed on their first 4 months of salary because evrything else (in the warzone) does not count against taxable income. Some of them were considering investing in a short term, high yeild army savings plan that you can do only when in warzone, but the kicker is that you pay on the interest capitalization up front and it counts as income. A couple of my soldiers pulled their annual statements and their salary for those 4 months leaves them just under EIC eligibility. The interest will push them over. So rather investing in this plan, I am encouraging them to pay off existing debt with the monies because in the end the investment income will be negated by the fact that they lose out on EIC.

Why should it be this difficult?

[Beskar]

I always preferred Rory's thinking of linear scale of tax brackets, obviously his proposal is different to this (his included negative tax). So lets say the tax brackets were 0, 10000, 20000, 300000, 40000 for simplicity sake.

Major Robert Dump earns his 16,500. For the first 10,000 there is no tax, but for the remaining 6500 he is taxed 10%, so he pays 650 in income tax.

Then we have HoreTore who in his comfortable job and he is earning 24,000. So same again, he doesn't get taxed for first 10,000 for the 2nd he is taxed 1000, for the remaining 4000, it increases to 20% so he is taxed 800 on that, so he pays 1800 in income tax.

and you sort of get the idea. The tax increases based on meeting hypothetical thresholds where the money after that is taxed more than the money under it. This allows those with poorer standings to pay less tax which would help them pay the bills, while those who do not need the money as desperately can afford to pay that little bit more and the rich who do not want for anything benefiting from those lower down the pay pyramid ends up paying the most.

Pretty fair method of taxation.

[Fragony]

Slowakia succesfully introduced flat-tax, works great, all progressive tax achieved is making progressive tax a possibility, and jobs for everybody involved of course, the snake is eating it's own tail. Doesn't quite go far enough for me, tax should be absolute no matter your income. It is not unfair you don't get any extra services if you are rich. And no I'm not

[Papewaio]

Australian tax rate is tiered. And some of the benefits taper out at a slower rate then the threshold increase ie you get more money by working.

However there are some higher income taxes ie Flood Levy at >50k (about 0.5% so not that much) and Medicare levy increases from 1 to 2.5% at a certain point if you don't take private insurance (ie if you are rich enough to have private insurance and don't then you have to pay more into the public one).

[ICantSpellDawg]

The best people go to community college? Have you ever gone to one? They are highschools with ashtrays. The people who went to mine were completely useless skells. Im glad I went, because it saved me alot of money and forced my 4 year to take me, but it was mostly white kids with an incredibly low IQ.

[ICantSpellDawg]

What sensible people do to stay under a bracket is work off of the books for the difference. The government can suck it hard some people might say, if they were inclined to do something like that.

[rory_20_uk]

A system that combined social security with the tax system would be the most elegant method of taxing and looking after individuals.

We no longer need a tiered tax system as computers can easily work on a sliding scale; if there are initial rebates for all and if all sources of income are treated the same way there is far less room for loopholes. A system of rebates, vouchers, refunds and whatever can make for very odd notches that might not have even been thought of as different parts will come from different agencies - and all have different armies of drones supervising them.

I can't really comment on the specific tax situation in America as frankly I am not exactly up to date with the nuances of their tax code.

~:smoking:

[Noncommunist]

The best people go to community college? Have you ever gone to one? They are highschools with ashtrays. The people who went to mine were completely useless skells. Im glad I went, because it saved me alot of money and forced my 4 year to take me, but it was mostly white kids with an incredibly low IQ.

The best of the bottom rung. Considering that the worst is in prison, community college seems pretty nice even if there are dumb people there. At least they're trying to get better.

[Lemur]

In keeping with the theme of the thread, a conservative columnist has just published a jaw-dropper of an article: Registering the Poor to Vote is Un-American (http://www.americanthinker.com/2011/09/registering_the_poor_to_vote_is_un-american.html). No, really. That's the real title. A sarcastic jab? A satiric joke? Unfortunately, no.

Why are left-wing activist groups so keen on registering the poor to vote?

Because they know the poor can be counted on to vote themselves more benefits by electing redistributionist politicians. Welfare recipients are particularly open to demagoguery and bribery.

Registering them to vote is like handing out burglary tools to criminals. It is profoundly antisocial and un-American to empower the nonproductive segments of the population to destroy the country -- which is precisely why Barack Obama zealously supports registering welfare recipients to vote.
Where to start with the counter-factuals and the logical fallacies?

Americans do not vote in their own economic self-interest, as has been established by numerous studies over the past five decades. This is not news. Anybody writing about voter behavior should know this.
To speak about "nonproductive segments of the population" implies that you have the magic key to know what a "productive" person is. Which is, if you think about it, an unwise thing to assert.
The longstanding attacks on the poor and the institutions that try to help them have always been framed as an attempt to root out criminal activity. By openly admitting that he just doesn't want to see anyone help poor people vote because they vote in ways he doesn't like, this idiot is sort of giving away the game.

[Major Robert Dump]

I think in addition to loosely defining what a productive person is, I would like to know how one defines something as being "American" as that is integral to determining what is "un-american."

This, where do you get this:Americans do not vote in their own economic self-interest, as has been established by numerous studies over the past five decades. This is not news. Anybody writing about voter behavior should know this.
Please explain. If this were the case, then why do we have lobbyists, why is the AARP the most powerful voter bloc in the country which incidentally coincides with the largest welfare-recipient bloc in the country.

I do believe recipients of state assistance will be more likely to vote with the candidate who will maintain that assistance, just like old people wont vote fot someone who wants to kill social security, just like an industry tycoon will vote for someone who is friendly to his industry.

Poor people voting to screw taxpayers and get more welfare.......rich people (all of whom are NOT productive, I can assure you) screwing tax payers to get more welfare, just a different kind. No difference really, except the rich ones sometimes "create jobs"

[Ironside]

This, where do you get this:Americans do not vote in their own economic self-interest, as has been established by numerous studies over the past five decades. This is not news. Anybody writing about voter behavior should know this.
Please explain. If this were the case, then why do we have lobbyists, why is the AARP the most powerful voter bloc in the country which incidentally coincides with the largest welfare-recipient bloc in the country.


I can't say were Lemur gets his sources, but from national data here, you'll see tendencies and not absolutes. That means that the rich are more prone to vote for lower taxes, but hardly that every rich does it and vice versa. Conservative poor still vote republican or even libertarian.

AFAIK we doesn't even got a single millionare libertarian on this board.



Benjamin Franklin supposedly said, "When the people find that they can vote themselves money, that will herald the end of the republic."

Aren't that what the Senate already does?

[Major Robert Dump]

True, I know plenty of dirt-poor conservatives who milk the system just like the dirt poor liberals the despise, as well as tax evading liberals who treat poor people like dirt. There are no absolutes

[Beskar]

A system that combined social security with the tax system would be the most elegant method of taxing and looking after individuals.
We no longer need a tiered tax system as computers can easily work on a sliding scale; if there are initial rebates for all and if all sources of income are treated the same way there is far less room for loopholes.

This is where we agree and it simply should be done in the method I outlined earlier, since that would prevent any loopholes or stop people turning down work because they are worried they will lose out on large amounts of money simply due to entering a higher tax bracket. Have staged taxation (or whatever the official term for it is) so the money is treated different as it enters the system, not a case of it being treated differently before it enters the system.

In the case of that, lets say £100,000 is the 50% tax bracket, they only start paying the 50% on the money over £100,000, not a case of if they earn 100,001 they will have to pay £50,000.50 tax and if they earn £99,999 they qualify for the lower tax bracket of lets say 40%, so only pay £39,999.6 in the current system. So in the staged system, they would only be paying £40,000.50 tax. This gives people more incentive to work more and hit higher tax brackets.

Obviously, this only works for the Working, Middle and Upper Middle classes. Rich people would be earning at the highest tax bracket anyway, so the whole "tax bracket" concern doesn't apply to them, so they just shove all the money down loopholes, so a simplified tax system where all income is taxable including alternative forms of income would help solve that.

[Lemur]

This, where do you get this:Americans do not vote in their own economic self-interest, as has been established by numerous studies over the past five decades.
Oh geez, where to start? Like I said, there have been many, many studies about how/why Americans (and I assume people in general) are so ready to vote against their own economic self-interest. I don't really know where to start. Here's a recent article (http://themoderatevoice.com/102213/this-is-why-americans-vote-against-economic-self-interest/), and there's one here (http://www.freakonomics.com/2005/11/04/why-vote/), and here (http://blogs.hbr.org/davenport/2008/11/voting_for_behavioral_economic.html), and here (http://www.slate.com/id/2204043/), and so on and so forth.

Commonly cited recent manifestations would be statistically significant numbers of poor people supporting Republican candidates who have openly pledged to slash services and support. If that isn't voting against your own wallet, what is? Also, support from upper-class and monied-class people for Obama over McCain in 2008, when Obama was pledging to repeal the Bush tax cuts. Clearly against their self-interest, but it happened.


If this were the case, then why do we have lobbyists, why is the AARP the most powerful voter bloc in the country which incidentally coincides with the largest welfare-recipient bloc in the country"
I think we're speaking past each other. I'm not saying that people will vote against their own self-interest exclusively, but it's a well-documented phenomenon that economic self-interest is a factor in voter behavior, but not even close to being the deciding factor. Have you read Freakonomics? If you're interested in irrational economic behavior, that's kind of a great read.

Lobbyists and lobbying groups would be an entirely different issue. Those are staffed by DC insiders who are under marching orders to support a particular agenda, which has nothing to do with irrational voters.

-edit-

MRD, I failed to respond to your earlier post about EITC. My bad. I was working some long hours. Is the current tax system too complicated? Yes, obviously. I don't know anyone who argues otherwise. Do I care about some soldiers moving very small sums of money around to earn a very small EITC? Not really. I mean, seriously, the sums of money you're talking about are minor, and if a soldier can do some small footwork to get enough money for a couple of car payments, then good for him.

My own attitude has always been that I just need to earn as much as I can, and then pay an accountant to sort it out. I remember one year when my income jumped up a lot, and my Jamaican accountant (http://accountants.reviewview.net/NY/Kings-County/Accountants/Linford-Blagrove-CPA-7188753574.htm) (who was a genius) told me I'd moved two tax brackets. I asked if that was a bad thing. He shrugged, and drawled, "Meestah Leemah*, eet ees bettah to have eencome than not to have eencome."

Words to live by.


* My real family name, strangely enough, is phonetically quite close to "lemur."

[Montmorency]

Eh, the Economist (http://www.economist.com/node/21525851)again. No one wants to be in last place or something.


It does, however, loosely reflect longstanding differences between Americans’ attitudes to taxation and those in much of the rest of the rich world. America is far less inclined than many of its rich-world peers to use taxation and redistribution to reduce inequality. The OECD, a think-tank, reckons that taxation eats up a little less than 30% of the average American’s total compensation, compared with nearly 50% in Germany and France. America’s top federal income-tax rate of 35% is lower than in many other advanced economies (although most Americans also pay state taxes). Britain’s top tax rate is 50%. Swedes and Danes acquiesce to tax rates that would outrage many Americans: Sweden’s top rate is 57% and Denmark’s is 55%. Unsurprisingly, the American state is also less generous to the poor. Unemployment benefits in the United States replace a smaller share of income, and run out more quickly, than in most European countries.

...

Social divisions also play a role in determining who within a society prefers greater redistributive taxation. In America blacks—who are more likely to benefit from welfare programmes than richer whites—are much more favourably disposed towards redistribution through the fiscal system than white people are. A 2001 study looked at over 20 years of data from America’s General Social Survey and found that whereas 47% of blacks thought welfare spending was too low, only 16% of whites did. Only a quarter of blacks thought it was too high, compared with 55% of whites. In general (though not always), those who identify with a group that benefits from redistribution seem to want more of it.

Paradoxically, as the share of the population that receives benefits in a given area rises, support for welfare in the area falls. A new NBER paper finds evidence for an even more intriguing and provocative hypothesis. Its authors note that those near but not at the bottom of the income distribution are often deeply ambivalent about greater redistribution.

Economists have usually explained poor people’s counter-intuitive disdain for something that might make them better off by invoking income mobility. Joe the Plumber might not be making enough to be affected by proposed hikes in tax rates on those making more than $250,000 a year, they argue, but he hopes some day to be one of them. This theory explains some cross-country differences, but it would also predict increased support for redistribution as income inequality widens. Yet the opposite has happened in America, Britain and other rich countries where inequality has risen over the past 30 years.

Instead of opposing redistribution because people expect to make it to the top of the economic ladder, the authors of the new paper argue that people don’t like to be at the bottom. One paradoxical consequence of this “last-place aversion” is that some poor people may be vociferously opposed to the kinds of policies that would actually raise their own income a bit but that might also push those who are poorer than them into comparable or higher positions. The authors ran a series of experiments where students were randomly allotted sums of money, separated by $1, and informed about the “income distribution” that resulted. They were then given another $2, which they could give either to the person directly above or below them in the distribution.

In keeping with the notion of “last-place aversion”, the people who were a spot away from the bottom were the most likely to give the money to the person above them: rewarding the “rich” but ensuring that someone remained poorer than themselves. Those not at risk of becoming the poorest did not seem to mind falling a notch in the distribution of income nearly as much. This idea is backed up by survey data from America collected by Pew, a polling company: those who earned just a bit more than the minimum wage were the most resistant to increasing it.