Sunday, December 12, 2010

Tax Compromise Simplified

From the White House website:

I can understand anyone for whom deficit reduction is a priority being unhappy about this result.  And I can understand that almost everyone can find something not to like in it.  What I have more trouble understanding are the people saying that this represents a capitulation of one side to the other.  It looks more like both sides are getting what they want, at the expense of letting the other side get what they want.  Negotiators call this a "win-win" solution.

And for those who enjoy the white board presentation, here it is, also courtesy of the White House:

I have an even simpler explanation, which I taught my kids when they were about two years old. They were trained to answer the question, "What is the difference between Republicans and Democrats?" by saying, "Republicans take from the poor and give to the rich, and Democrats take from the rich and give to the poor." It has always seemed to me that if we appreciate that basic difference in philosophy, politics becomes a lot easier to understand. With respect to the tax cut compromise, this difference may explain why a lot of people on both sides are unhappy.  Although the agreement satisfies each side's desire to give to their favored group, it does not satisfy their desire to take from the disfavored group. But in the spirit of the season, maybe it would be best just to celebrate the giving aspect of this solution.


  1. It just seems to me that many of the democrats who are opposed to this compromise are looking at things from an ideological instead of a real world perspective. I also think there's quite a bit of selfishness that's at play in this entire drama. I've always understood that, for many republicans, selfishness is a way of life, but I've never seen selfishness and intractability as a key trait of democrats, but I'm seeing it now.

    They would rather see millions lose everything they have than to act like grown ups and take the deal, which, I think, will help speed up economic recovery. Rejecting the compromise means that we could possibly be looking at a double dip recession. I guess that would give the frustrati something else to pin on President Obama, even though they would have been fully involved in making sure the compromise is killed.

    I've not heard/read one solution from any of them that would actually help solve this problem. They keep screaming the same things over and over again, and imo, they aren't being very realistic because they refuse to acknowledge the fact that the republicans would oppose everything that has only Obama's name on it, and that some of the democrats, like Ben Nelson will vote with the republicans against the legislation.

    I've always thought of democrats as making decisions and taking positions on an issue that are based on reality, but after watching the faux outrage the past week, I now have a different view of many of them who seem to think that they speak for me. They don't. I'm not a resident of Oz, Narnia, or any of the other fantasy lands the frustrati seem to be inhabiting at the present time.

  2. The Social Security "Holiday" is a setup to destroy the system (much like the Cat Food Commission, which failed to get the job done, thank God!). SS is already being threatened as "too costly," and now we'll make things worse, so Rethugs can argue for its overhaul or privatization. And, of course, raising SS taxes back to where they are now in 2012 will hurt us in the campaign. What is going on in the White House?

  3. ZK, you make some good points, but I have to warn you that I discourage name calling on this site. Some of my favorite commentators here are Republicans, and though I'm the first to tell them how misguided they are, I try really hard not to call them names. So if you use a term like Rethugs again, I might have to delete your comment, and I would hate to do that.

    majii, welcome back, and I don't think I am employing a double standard if I say that I think the term "frustrati" is within the bounds of the kind of dialog I am trying to encourage here. In fact I like that word so much I might have to borrow it sometime.

  4. "Republicans take from the poor and give to the rich, and Democrats take from the rich and give to the poor."

    I find it hard to believe you believe that. Say it ain't so Joe.

  5. Well take a look at the chart KP. How else do you explain it? And listen to every debate on social programs or tax policy.

    Democrats want to increase the minimum wage, expand unemployment benefits, increase the earned income tax credit, provide more education funding, school lunches, food stamps, Medicare, Medicaid etc., and they want to increase tax rates on the rich.

    Republicans want students to pay higher fees at public universities, cut Medicare and Medicaid, privatize Social Security, reduce federal spending for parks, education, housing and most everything else that would benefit poor people, and reduce taxes on the wealthy. If that's not Robin Hood in reverse, what is?

  6. Ahhh ... I think I understand. By using the labels Dem or Repub you are defining a narrow sub set of people/citizens who hold elected office. Who by the way, represent a small fraction of us who are forced to choose between increasingly polar opposite candidates who don't believe or govern as we Hope.

    Consider yourself fortunate (or troubled) that these issues are so clear to you. The rest of us (the majority) are as mad as hell at you Dems and Repub.

  7. As if a chart can accurately describe individuals (people). Some of whom are Dems and some of whom are Repub. Most of us are neither but are asked to choose between them and are angered by being told who we are.

    Who am I? I am okay with paying more taxes. I am okay with VAT. I dislike our trade policies. I want "don't ask don't tell repealed". I think a rising tide of small business will lift all boats. I am angry at Wall Street. I want to see more political pragmatism. I am tired of finger pointing left to right or right to left. I don't care if you smoke mary jane. I have a child with cancer and want Americans with pre-existing disease to have medical coverage. I favor off shore drilling. I want more nuclear power plants. I don't own a house a car or anything else. If you think you know, I caution you that you don't. I am the in the majority; the middle; and we are not pleased.

  8. How many jobs do the poor create?

  9. KP, if your point is that politicians should be spending more time trying to solve the practical problems of people like yourself instead of simply advancing their own ideological agendas, then you couldn't be more right.

    And Harrison, if you're saying that rich people create more jobs because they can afford to pay their gardeners and their cooks and their lawyers and accountants, and they can invest the capital to create a company that employs people, then of course you're right, but that ignores the question Marxists would ask, which is, how did the rich person get to be rich in the first place. Perhaps it was because he was profiting from exploiting his workers. In which case it was actually the poor who created all that wealth, and therefore the workers who actually create the jobs. I'm not about to try to resolve that argument here, but I just want to point out that it is a bit simplistic to suggest that there is a direct relationship between reducing the tax rates for rich people and creating jobs. Let's take someone who is rich because he is a star professional athlete for example. That person is not creating any jobs. He is just an employee providing entertainment for people, which people value enough to pay him a very high salary. And let's say that professional athlete uses his very high salary to buy expensive automobiles imported from Germany, or villas in France. How many jobs for Americans are they creating by doing that?

  10. Thanks Joe. I agree, politicians and the rest of us should be spending additional time attempting to solve practical problems. The opinions I shared (and I could go on about war, spirituality, charities, etc) cross party lines. Partisan politics has become borderline naivete.

    I suggest the example of a professional athlete is not a particularly good one. Some NFL franchises are worth over 1.5 billion. They employ thousands and thousands of people; vendors, clothing manufacturers and other indirect work. The wealthy athletes are an example of union organization, fair pay and the free market. Same with MLB and the NBA; and all musicians or movie personalities that provide work at theaters, as concert roadies, etc, etc. They are powerfully unionized and create wqealth for hundreds of thousands of employees. We shouldn't automatically associate jobs created by successful businesses with abused workers. Most of us who have or have had a business that employ people are concerned for their welfare.

  11. I have nothing against athletes, but they are a good example of people we could probably tax at a higher rate without worrying about whether we are harming the economy by doing so. Hedge fund managers would be another good example. Maybe even lawyers and doctors.

  12. Joe, there are not very many pro athletes in the world but they actually do create jobs indirectly. The companies that sell the products they endorse, who sell them the things they buy (cars, homes, watches, whatever), not to mention all the people who work for the team in the back office, etc... But how well has Marxism worked out that you should cite it as a point?

    Most jobs are created by people who aren't poor. My father was not filthy rich or even rich but he ran a store which employed about 20 people. He didn't "exploit" his workers, either. When taxes got too high the hassles weren't worth it and he sold the building and closed up shop and everybody lost their jobs. Why should he bust his ass 100 hours per week only to end up giving most of what he earned after payroll to the government? It was a better deal to just collect rent from others.

  13. Poor people also buy things, and if they had more money they would buy even more things. So they create just as many jobs. In the short run, they create more, because they don't save as much of their money.

    It's funny how you are so quick to rationalize lowering tax rates for athletes or movie stars or whatever high-salaried group you want to name, on the ground that they spend their money to help the economy, but you are much more begrudging of extending unemployment benefits or food stamps or rent assistance or whatever kind of assistance you want to name for poor people, so that they could do exactly the same thing.

    I'm sure your father was a hard-working guy, but was it really high taxes that forced him to close his store? Overall tax rates have really not changed all that much. Payroll taxes have increased, but income taxes have generally decreased over time.

  14. Joe, studies have shown that the longer unemployment benefits are, the longer people stay unemployed. This is a fact. Movie stars or anybody who EARNS their money is doing just that... earning it.

    Regarding taxes here are two fun facts for you:

    In 1980 there were eight tax brackets and the highest was 70%. People earning more than $200,000 reported a total of $36 Billion in income and paid $19 Billion in tax.

    In 1988 there were only two tax brackets, 15% and 28%. The over-$200,000 group reported $353 Billion in income and paid $99.7 Billion in tax.

    Regarding my father, the city in which his business was located became very unfriendly to businesses and the costs got too high so he closed up shop.

  15. << I have nothing against athletes, but they are a good example of people we could probably tax at a higher rate without worrying about whether we are harming the economy by doing so. >>

    Are you profiling? I think you may be profiling?