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Your host, PM 'Papa' Carpenter


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« Reaganism —> Trumpism | Main | »

December 29, 2015


Eugene's actually consistent. His point is there are two major strains of Republicanism not necessarily equal in force. There are boring centrist Republicans extant. They're just trying as hard as they can to be invisible lest they're exposed to scorn from wingnuts or I-told-you-so smugness from liberals. Robinson should know acknowledging them is like saying he saw a UFO.

I have always felt and bored at length that the idea that people vote against their interest is in many respects simply horseshit. Are those southern workers resistant to the joys of unionization? It seems so. But look who got all the newly constructed auto plants or the lion's share of them. Wisconsin was once the most heavily unionized state around. It lost them under Democratic governance and not Republican. Many promises were made on the left that they knew how to stop globalization for which read someone somewhere made what you were making cheaper. Was there some policy that could have prevented this like, say, protectionist trade policies? Why no there aren't as any competent economist could tell you. It always costs you more than you gain and the gains such as they are generally protect specific groups at the cost to everyone else.

The old model fell apart when the largest groups of unionized workers wound up being not in the private sector but in the public sector. So the workers in the private sector wind up paying taxes to give people in the public sector wonderful things that are now beyond their own reach. And they know it. They know who the system serves and it isn't them. Which makes them extremely receptive to the idea that their interests are best served by paying less taxes. That at least has the merit of letting them keep something to take care of their kids and maybe save for retirement. They vote for Scott Walkers precisely because he does represent their interests and they very rightfully resent being asked to pay for things for politicians and public workers they could not dream of having their government provide to them.

So powerful is the message of lower taxes that the democrats are right on board with that philosophy and they try to sell it on the basis of income inequity. Which I am afraid is bullshit too. Most of the wealth that they speak of takes the form of capital gains on rising stock values which is largely theoretical wealth and isn't even taxable as capital gains unless it is sold. Or other dumb ideas like a transaction tax on the billions of low margin trading transactions. It's a good idea for stabilizing the market by eliminating most of them. Anyone who thinks these trades will continue when the tax is higher than the profit is pulling their own leg. It won't raise revenue because it will stop most trades from taking place. I could go on about other tax asininity but the upshot is the only thing that will restore equity is to raise taxes on the middle class. That's where the money is and the only way to make the spending of it fair is universal program spending and not special deals for party factions. I'd like to publicly tell all the unions fighting so hard against the Cadillac health care tax to piss up a rope. That's how people farther down the economic scale are going to get their health care. Don't ask me to support you when you are stabbing the less fortunate in the back.

The US is not Canada:

"After-tax middle-class incomes in Canada — substantially behind in 2000 — now appear to be higher than in the United States."

Also, since the Reagan tax cuts the upper brackets have been at historic lows for the modern age:

Wealth redistribution upward and privatization have severely distorted our economy. The middle class has shrunk and blaming public workers for our problems is off point.

Not that the argument doesn't work. I'm always amused to hear Trump supporters say he's a champion for the middle class even though he wants YOOOOG tax breaks for the top brackets and tiny ones for everyone else and says wages in the US are too high.

I'm a firm believer in progressive taxation. Which means I am very happy to have a CEO make three hundred times what a worker for the firm they manage earns. In the same way I don't care if a baseball or football player earns three hundred times what a stadium hotdog vendor earns. As long as those high earners are paying the top marginal rate and have no escape deductions all benefit. The government gets a lot more revenue than if that income were spread over a large number of families paying a lower tax rate. So what is the point of silly campaigns about CEO compensation when the real argument should be about loopholes that allow people to avoid the progressive taxes? That's a lot more important and probably more achievable.

The numbers don't lie. Even if you raise the top marginal rates on the top 10 percent the gaps between government revenue and spending requirements can only be bridged by tax increases on the still vast middle class. That's where the real money is.

It's hard to convince most people they should pay more taxes when the top brackets have gotten huge cuts as their income has skyrocketed:

"While there is consensus that overall federal taxation is progressive, there is dispute over whether progressivity has increased or decreased in recent decades, and by how much.[87][88] The total effective federal tax rate for the top 0.01% of income earners declined from around 75% to around 35% between 1960 and 2005.[87] Total effective federal tax rates fell from 19.1% to 12.5% for the three middle quintiles between 1979 and 2010, from 27.1% to 24% for the top quintile, from 7.5% to 1.5% for the bottom quintile, and from 35.1% to 29.4% for the top 1%."

Bingo! Really the only way at this point to actually restore rational taxation policy is to do the obvious. Scale the largest tax increases to the highest tax brackets but increase them all. Compensate the lowest income brackets with earned income tax credits. And for god's sake don't try to justify it as paying down debt or even more stupidly using the money to cover something like unfunded pension liabilities. Nobody except direct beneficiaries will buy in. You have to give everybody something even if it cannot equal their tax increase.

I guess I'm predisposed to like people named Bob. The author of the most popular comment ever posted at the New York Times is named Bob from Calgary. It's an interesting and appropriate comment to our exchange. Check it out.

Bob from Calgary's probably too polite to write that not only is he as free as Americans, he's more free. Canada also has a higher standard of living, contrary to what most Americans believe. If not for being averse to cold weather I'd have moved up there long ago. There are still times I wish I had.

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