Tax Burden

by Don Boudreaux on August 14, 2007

in Myths and Fallacies, Standard of Living, Taxes

My George Mason University colleague, law professor Todd Zywicki, has a wonderful op-ed appearing in today’s edition of the Wall Street Journal.  (Unfortunately, a paid subscription to the WSJ is required to access this article.)  In this essay, Todd reports that the data show that the category of expenditure that has risen most, in both percentage terms and in absolute dollar terms, for the average American household over the past 30 years is taxes.

Here are the concluding paragraphs from Todd’s not-to-be-missed op-ed:

Although income only rose 75%, and expenditures for
the mortgage, car and health insurance rose by even less than that, the
tax bill increased by $13,086 — a whopping 140% increase. The
percentage of family income dedicated to health insurance, mortgage and
automobiles actually declined between the two periods.

During this period, the figures used by Ms. Warren and
Ms. Tyagi [in their book The Two Income Trap: Why Middle Class Mothers and Fathers are Going Broke] indicate that annual mortgage obligations increased by
$3,690, automobile obligations by $2,860 and health insurance payments
by $620 (a total increase of $7,170). Those increases are not trivial
– but they are swamped by the increase in tax obligations. To put this
in perspective, the increase in tax obligations is over three times as
large as the increase in the mortgage payments and almost double the
increase in the mortgage and automobile payments combined. Even the new
expenditure on child care is about a quarter less than the increase in
taxes.

Overall, the typical family in the 2000s pays
substantially more in taxes than the combined expenses of their
mortgage, automobile and health insurance. And the change in the tax
obligation between the two periods is substantially greater than the
change in mortgage, automobile expenses and health-insurance costs
combined.

This suggests that the most important change in the
balance sheets of middle-class households over the past three decades
is a dramatically higher tax burden caused by the progressive nature of
the American tax system. In turn it follows that the most effective way
of alleviating the household budget crunch would be to adopt lower and
flatter tax rates that would reduce the government’s take. Another
possibility, advocated by Prof. Edward J. McCaffery of the University
of Southern California Law School, would eliminate the "secondary
earner bias" in the tax system, which causes all of the wife’s income
to effectively be taxed at a much higher marginal tax rate than the
husband’s. Any of these reforms seem sensible.

Lower and flatter marginal tax rates generally are not
advocated by those who dominate the American legal academy today. But
for those who want to consider serious strategies for preventing
bankruptcies, less money in Uncle Sam’s pockets may mean more money in
ours.

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{ 48 comments }

David Z August 14, 2007 at 11:18 am

I don't doubt it. I remember my father – years ago – saying that my mother's entire salary was consumed by taxes in one form or another: her income tax, his income tax, property tax, etc. The only way we could've maintained our lifestyle on his income alone is if we were entirely tax-exempt.

muirgeo August 14, 2007 at 11:34 am

I think this is an important point for all to understand because 30 years ago was about the start of the Reagan "revolution".

Next ask why the Republicans who have been mostly in charge for tht last 30 years have never even attempted to push the agenda of a flat tax. (Except for Steve Forbes)

As Warren Buffet recently showed he paid 15% tax on his income while his secretary paid 28%.

The big guys running this country don't won't competition, they don't want fair markets, they don't want flat taxes and they don't want to end their corporate welfare. The best way for them to not have things change is to weaken the middle class. This article shows the degree of their success. They amazingly even get a lot of those middle class people to vote for them.

I sometimes think the flat tax issues is one of those issues the democratic party should take up to their parties interest and to the interest of the country and its middle class.

Robert Stephens August 14, 2007 at 11:53 am

Of the two qualities, I suspect lower is far more important than flatter. I can't see getting too excited about paying 5 times my neighbor's tax rate if at the end of the year, my tax bill is $50 and his $10. I can see getting very excited if I had to pay 90% of my income in taxes and I'm not sure it would calm me down any to know my neighbor was paying 90% as well.

Progressive rates are an opiate for the envious and politically necessary when the only object of the tax system is to extract the greatest possible revenue from the population at large without relation to "services provided".

Russ Nelson August 14, 2007 at 12:09 pm

The income tax was sold to voters on the principle that the rich should pay their 'fair' share. Now that we're all rich, we're all paying and paying like rich people.

shawn August 14, 2007 at 1:02 pm

…Ed McCaffery? The Broncos' receiver? He's a law professor now?

Man…who'da thunk it.

kebko August 14, 2007 at 2:31 pm

Several years ago, I had to take a test for a contractor's license. The test mostly had to do with labor & payroll issues. The state had study guides available, but the most recent version I could find at the library had been published in the late 60's or early 70's. The details were generally correct when it came to the test. However, the tax rates in the study guide, across the board, were lower than any of the 4 or 5 multiple choice answers available on any question.

The Dirty Mac August 14, 2007 at 2:45 pm

Muirgeo:

That actually was your best post. My only significant disagreement is that I don't think the middle class has been weakened. For my middle class parents, eating shrimp or going on a plane or the car hitting 100,000 miles were big deals.

Dick King August 14, 2007 at 3:29 pm

Muirgeo:

"As Warren Buffet recently showed he paid 15% tax on his income while his secretary paid 28%."

Corporate tax rates are 35%, if I remember correctly.

The 15% tax is probably capital gains or dividends, which means that the companies in which he invested will have had to have earned $1.54 to deliver $1 pre-tax income to him, of which he gets to keep $0.85 .

$0.85 / $1.54 = 0.551 . Mr. Buffet is paying 45%.

The money earned by the companies that goes into payroll is subject to substantially smaller taxes, perhaps 10%, and even most of that is FICA, which you supposedly get back when you retire [and a lower earner gets a better return]. The secretary may therefore pay 30% or so.

-dk

TLH August 14, 2007 at 4:10 pm

The Dirty Mac:

Not so fast.

Interest on municipal bonds is untaxed.

Inherited assets come into your possession at the market value ("step up basis"), not at the value your grantee paid, so the capital gain is completely untaxed.

Selling real estate for $15 that you acquired for $5 results in a $10 capital gain, without there being any ordinary income whatsoever to be taxed in the meanwhile.

TLH August 14, 2007 at 4:12 pm

(Whoops, that should have been addressed to dk, not Dirty Mac.)

spencer August 14, 2007 at 5:04 pm

According to the GAO from 1979 to 2005 the effective federal tax rate — including income, SS & all other taxes — for a middle class family fell from 19.4% to 16.8% of middle class income.

This data is in very sharp contrast to the data quoted in the article.

Do you know the source of the data quoted in the article?

Maybe real estate taxes could account for the differences but I would like to see the raw data.

Floccina August 14, 2007 at 5:10 pm

TLH wrote:

"Interest on municipal bonds is untaxed."

When one buys municipal bonds one is choosing to pay taxes to local governments at a slightly lower rate over paying taxes to the federal government.

Methinks August 14, 2007 at 5:27 pm

Interest on municipal bonds is untaxed.

Not true. Except from New York, Puerto Rico and one other location which I always forget, you have to pay state and local taxes. Plus, it's still subject to the AMT and the tax benefit is reflected in a lower interest rate received by the bond holder.

Inherited assets come into your possession at the market value ("step up basis"), not at the value your grantee paid, so the capital gain is completely untaxed.

Are we forgetting the death tax? That tax has to be paid on the capital gains to date before the new basis is established and it is far above the regular income tax rate, let alone the capital gains tax rate. So, the capital gains are not only not completely untaxed but also taxed at a much higher rate.

Selling real estate for $15 that you acquired for $5 results in a $10 capital gain, without there being any ordinary income whatsoever to be taxed in the meanwhile.

Unless you rented the property to someone. Rental income is taxed at the regular income tax rate. What's your point?

I still don't see how your post had anything to do with what DK wrote. Buffet doesn't speculate in Real Estate and doesn't hold a portfolio of Munis. His returns were pretty much all capital gains and dividends.

Python August 14, 2007 at 8:32 pm

I would like to see the data broken out by income classes as Spencer has suggested. But also by federal income, state income, corporate, state sales taxes, real estate, etc. My first thought, like Spencer's, is that inflation-adjusted federal income tax has not increased for most people in the past 30 years. I'd also bet that real estate taxes are much higher now considering home ownership and housing prices are up.

However, I have no data to back this up.

Could someone post the tax burden broken out into different groups?

Spencer, can you post a URL for the data you picked up? Thanks.

beeper August 14, 2007 at 9:30 pm

Spencer, the article reports dollars spent on taxes not rates.

The point of the article was to show that taxes have grown faster than other parts of a household's budget, not to suggest that average tax rates have grown.

M. Hodak August 14, 2007 at 11:25 pm

I thought this was a great article by Todd. I had just one niggling comment related to this:

"This suggests that the most important change in the balance sheets of middle-class households over the past three decades is a dramatically higher tax burden caused by the progressive nature of the American tax system."

To use the correct accounting term, this would be a change in the income statements, not balance sheets.

And beeper is right, the point of Todd's article was not that tax rates have gone up but that the value we get for our hard-earned dollars has improved in every major area of our lives with the notable exception of government, unless you believe that you are getting so much more from government now than 30 years ago that its a bargain.

Sam Grove August 15, 2007 at 2:01 am

Let us not forget that those taxes make everything we buy more expensive.

vidyohs August 15, 2007 at 9:03 am

muirgeo,
Your comments might work if but for the fact that some of us remember that during that thirty years Reagan managed to lower tax rates dramatically even though the democraps held the House, and that held steady until the tax increase Daddy Bush let himself be coerced into; but then during the 8 years of Clinton we saw the largest tax hikes in the last century, and yes he did it with the aid of both parties. Since Baby Bush came in to the presidency we have seen tax cuts again.

I think over all it would have to be acknowledged by objective observation that, without the repulicraps, taxes would never have come down from the highs of the Carter administration and most certainly would have gone even higher than the above article tells us.

So perhaps that is how a substanital amount of that middle class votes republican.

Henri Hein August 15, 2007 at 1:19 pm

"I suspect lower is far more important than flatter"

One of the problems is that progressive rates allow politicians to sell voters on "soak-the-rich" tax schemes. A tax hike on only the so-called rich is politically palatable, while a tax hike on everyone is not.

muirgeo August 15, 2007 at 1:26 pm

vidyohs,

If you read the article it goes against what you are saying. In fact Reagen's policies mostly decreased taxes for the wealthy. The increase in social security taxes he made to cover his booming deficit numbers hurt the middle class. The loss of some deductions hurt the middle class.

The bottom line is over the last 30 years taxes have been restructured away from corporations and the wealthy. Now the middle class pays a greater share in state, local and federal property taxes.

The claim the wealthy pay an even greater percentage of all taxes rings hollow when its seen that this is simply a result of their incomes booming way more then the middle class.

I can guarantee you many in the middle class would love to pay more taxes if it ment their income went up anything like the top 1%.

It's class warfare, its waged by the republicans for the wealthy on the poor and the middle class and they've been kicking butt for 30 years now. And like some cult people will continue to vote against their interest in spite of the facts and the numbers so they can support a propagandist ingrained ideology that they'll stand by to their own detriment and to the detriment of their country.

The Albatross August 15, 2007 at 1:53 pm

According to the lastest figures from the House Joint Economic Council and the IRS the wealthiest American paid the following share of income taxes.
Top 1%= 36.89%
Top 5%= 57.13%
Top 10%= 68.19%
Top 25%= 84.86
Top 50% = 96.70
Bottom 50%= 3.3%

Also I will throw out there (don't know if it has been mentioned yet) that what is probably hurting the middle class is the AMT–passed in '69 if I remember my federal income tax class right.

muirgeo August 15, 2007 at 3:07 pm

These 2 charts pretty much explain it all.

Basically increased income for the top 1% and decreased progressivity in the tax structure has resulted in crumbling infrastructure, massive increases in public debt (most going to corporate welfare), greater taxation of middle class and a general erosion of the middle class.

http://www.cbpp.org/3-29-07inc.htm

http://www.cbpp.org/3-29-07tax.htm

Objectivist August 15, 2007 at 4:09 pm

What we need to do is replace all the taxes we have now at all levels with VATs. VATs at the federal, state and local level would be much more efficient, save tax dollars, be more resilient in terms of revenues (consumption is less elastic than income), and save people lots of tax headaches. Now if we could just get rid of the 16th ammendment….

MiltonFriedman August 15, 2007 at 4:37 pm

It reminds me of what Mencken said about liberal progress and taxes.

Methinks August 15, 2007 at 4:46 pm

Vidyohs,

I agree with you but I need to make one correction. The top marginal tax rate was not at its height during the Carter administration. It was at its height (94%!!) when Kennedy took office. What the dumbocrats forget is that Kennedy cut the tax rate!

Now, if only we could get government to stop spending for "the greater good".

I also agree with Objectivist – we should have a consumption tax instead of an income tax. We should be taxing what we take out of the economy, not what we contribute to it.

Unfortunately, now that we have the income tax, it's become a handy political tool for misguided (and unsuccessful) attempts at class warfare.

Methinks August 15, 2007 at 4:53 pm

It's class warfare, its waged by the republicans for the wealthy on the poor and the middle class and they've been kicking butt for 30 years now.

Uncle Karl would be proud. Of course, just like Karl Marx, you would have to ignore actual facts in order to put forth an idiotic thesis (wages were rising as Marx wrote his predictions that wages and return on capital would decrease because of
competition inherent in capitalism).

And like some cult people will continue to vote against their interest in spite of the facts and the numbers so they can support a propagandist ingrained ideology that they'll stand by to their own detriment and to the detriment of their country.

And like a brainless true believer (a.k.a. useful idiot), some people will just spew whatever red commie gospel Comrade Krugman writes. Comrade Krugman and our resident tool know exactly what's good for those dumb people!

Same crap different day.

Lee Kelly August 15, 2007 at 5:38 pm

Muirgeo,

In what peculiar world do you live in where the "classes" are organisms that can hurt or love? Different income groups (or "classes") are just abstractions, fairly arbitray abstractions at that.

Worse still, the income groupings are not even comprised of the same people from year to year, so it is especially disingenuous to make broad and sweeping moral judgements based upon these abstractions.

In fact, check out the rich lists in countries such as the US and UK for the last 30 years. There are more selfmade billionaires than ever before, people who once were "lower class" according to some bereaucrat somewhere.

One of the most important factors in income is age, and many of the people you believe are at war with each other are parents and children, uncles, aunts, nephews, neices, grandchildren, grandparents, etc.

The same people who count as "lower class" today at 20 years old, will be "middle class" or "higher class" by the time they are 50.

However, do not interpret this to mean that I condone corporate welfare, I categorically do not. If I had my way, such blatent political corruption would be a criminal offence, written into an unrevisable constitution.

The point is that you do a spectacular job of ignoring how great Western economies are, even with the problems that exist. To put it bluntly: humanity has never had it better. To read your posts, it'd be hard to believe.

John ewey August 15, 2007 at 5:45 pm

"To put it bluntly: humanity has never had it better."

Absolutely true!

muirgeo August 15, 2007 at 7:34 pm

To put it bluntly: humanity has never had it better. To read your posts, it'd be hard to believe.

Posted by: Lee Kelly

Lee I agree with that statement at least for the worlds developed countries. However, its clear to me that the income disparities are simply/mostly a result of people in power at the top tilting the rules in their favor.

The income disparity and corporate welfare robs from the public treasury and weakens our nation and its middle class.

You may be OK seeing the wealthiest among us enjoy 400% increases in income while the average hard working middle class family is working more hours just to stay the level. I'm not. I'm uncomfortable with that because I know it's NOT a result of "free markets" but is indeed the result of manipulated markets by those in power. I hold myself and my country to a higher standard.

I suspect in China your claim, "humanity has never had it better" is also true. But couldn't they do better?

Dick King August 15, 2007 at 7:47 pm

TLH, I strongly doubt that Mr. Buffett is getting Muni bond dividends or inheriting his ample fortune. It is theoretically possible for an immensely rich individual to get that way by investing in real estate, but Mr. Buffett doesn't do that.

My statement that Mr. Buffett is paying 45% federal taxes [plus 6.84% income tax which he pays to his state of Nebraska and which his secretary also pays but which he cannot deduct but his secretary can, plus property taxes which both he and his secretary pay] remains unrebutted. Mr. Buffett had a political axe to grind when he made his disengenuous statement, and with his acumen I have to assume it was intentional.

-dk

Python August 15, 2007 at 10:27 pm

Muirgeo,

Please explain your statement: "I'm uncomfortable with that because I know it's NOT a result of "free markets" but is indeed the result of manipulated markets by those in power."

Please cite specific examples, and explain who you mean by "those in power".

muirgeo August 16, 2007 at 1:34 am

Python,

That I even have to list some examples of how the process is rigged is a sad statement of your level of understanding of how this country operates. I seriously would like to know your main sources of information.

The Medicare Part D bill was written by a congressman , Billy Tauzin (R-La.), who had to ask special permission to leave congress early to sign on with (PhRMA), the drug industry's trade organization, for a multi-million dollar contract. He basically then wrote and used his connections to get the legislation passed over many other better bills.

http://content.nejm.org/cgi/content/full/354/22/2314

Billy Tauzin should be rotting in jail but instead he is now one of those low level multi-millionaires who you think needs protection from the class warfarist who wish to "steal" his money.

This is no aberrancy but is in fact standard operating procedure with as many as 90% of bills being written or heavily influenced by lobbyist.

I'd bet 95% of all Americans know nothing of the details of this outrageous story due to corporate medias complete sellout to profit over investigative reporting.

Python please do go on about how you support free-markets but for Christ sake don't pretend to tell me you think thats what we have in this country. America's corruption rating 50% higher then Mexico…that's a joke.

I honestly think Friedrich Hayek would be outraged at the process that goes on in this country and by people like you claiming to be economic libertarians supporting or at best denying this crap.

SaulOhio August 16, 2007 at 5:50 am

MuirGeo: Nobody here is denying that there has been a large amount of collusion between government and industry. They just doubt your particular details of the matter, and the spin you put on it. They especially doubt your solution to the problem, which is basically more of the cause. You are like a witch doctor trying to cure an anemic by bleeding him.

muirgeo August 16, 2007 at 8:56 am

Saul,

How is severing the economic influence and conflicts of interest between politicians and money "more of the cause"? IMO doing such is not unconstitutional and would weaken both politicians and the economic royalist ability to screw everyone else.

How do you pose we solve the problem? Do you understand that the people in charge are both preventing my push for a more pluralistic democratic society as well as preventing your push for a more libertarian society? Do you understand that those running the show thrive off of the political corruption that can come from my "big government" but they can also thrive from the deregulatory environment you might push for. In fact they can take advantage of both to their opportunity. The best place to make money in this current "free market" is through a government contract. The war in Iraq and the Medicare bill are just two examples of massive transfers of wealth from the public treasury to the "free markets".

What part of my spin on the Medicare story do you doubt?

SaulOhio August 16, 2007 at 10:14 am

How do you propose severing that economic influence? From what I know of you reading what you write on this site, what you want is more regulation, more government intrusion into the economy, government acting to somehow create more economic equality. In other words, you want to give politicians more power that corrupt businessmen will want to buy.

The right way to sever it is to take away government's power. The right way is a free market. The way to take advantage of a free market is to make a product or service people are willing to buy.

And as usual, you use a strawman argument. You call what we have now a free market. Nobody here has called it that.

"The war in Iraq and the Medicare bill are just two examples of massive transfers of wealth from the public treasury to the "free markets"."

If you have a coerced transfer of wealth, then what you DON'T have is a free market. (And money GOT to the "public treasury" by a coerced tranfer of wealth.)

You keep calling a tail a leg and count five legs on a dog.

Isaac Crawford August 16, 2007 at 10:16 am

"What part of my spin on the Medicare story do you doubt?"

What is doubted is your confidence in the government to control itself. What you want are some more laws, I'm sure that they will be passed in a vacuum away from any influence, right? It doesn't matter what laws you pass, the current structure of the congress and Senate guarantees that special interests will be served. The ONLY way to get rid of what you see as wrong is to get the government out of the regulation business, then they have no power. With no power, there will be no interest from special interests, they will have to prove themselves on the market. What most of us on this forum find fascinating is your ability to think that a corrupt body will not only pass legislation to limit its money making ways, but that they will actually enforce it. What is more likely to get rid of the problem you brought up, another layer of bureaucracy, or the elimination of the power to control things. Yes, we understand your fear of the world coming to an end if people voted with their wallets on which industries and services thrived, but the only alternative is the corruption that is enabled by the power of the state that you want to control so many things…

Isaac

muirgeo August 16, 2007 at 10:18 am

Dick King,

If I have all my income from dividends my tax rate is 15%. If I don't have ownership in the stock I'm not paying 35% corporate tax.

Further many major corporations have taken their addresses off shore and have paid no corporate tax.

Also Warren Buffet was talking about federal taxes not state and local. If you add those things in middle class Americans percentage of taxes goes up even further.

Finally is being granted a corporate charter a right or a privilege?

SaulOhio August 16, 2007 at 11:32 am

Oh, but I forgot. Muirgeo wants a more "pleuralistic, democratic society" in which its not the politicians making the decisions, its the people. Whats the differerence? You are still granting government more power than it should have, power that CANNOT be used responsibly. How the hell do "the peepul", most of which are ignorant of medicine, decide how to provide people with medical care? How do they decide economic policy, when they are so ignorant of economics?

Python August 16, 2007 at 2:12 pm

"If I have all my income from dividends my tax rate is 15%. If I don't have ownership in the stock I'm not paying 35% corporate tax."

I love it. Nice understanding of how the world works. I'm gonna frame this one up on my wall.

Python August 16, 2007 at 2:27 pm

Muirgeo,

Per your statement above regarding Tauzin.

I asked you to support your statement. You didn't. You went on one of your famous straw men rants.

Please, please, please tell us what you mean by "I'm uncomfortable with that because I know it's NOT a result of "free markets" but is indeed the result of manipulated markets by those in power."

Because I gotta tell you that your evidence that one guy who helped write a bill, and left to join the industry that the bill is associated with is not proof of a manipulated market by those in power. Do you seriously want people writing laws that have no idea about the industry that they are involved in?

You claim that there is manipulation in America, and that corporations get too much face time with the government. Yet you still trust the government to raise more taxes, make more laws, and oversee the ignorant 95% who don't know as much about stuff as you do. LOL. LMAO. ROTFLMAO.

You are looking at the problem the exact wrong way. You don't get a freer market by sending more power to the law makers. I'm sure deep down you understand that, but you don't like to think about it.

And yes, Mexico is far more corrupt then anything that is happening in the United States. Living near the border and following Mexican politics for the past 30 years I am 100% sure of that. But if you want to go find a reliable measurement of corruption that shows US close to Mexico then I'll look at it. I have cited 2 that don't, but you don't like them. Now show me yours :-)

And you do know that the US was ranked very high in your ranking system that you listed, just to remind you.

Russ Nelson August 16, 2007 at 7:29 pm

Python, you are far too generous to muirgeo. I'm sure deep down muirgeo DOESN'T understand that.

muirgeo August 17, 2007 at 2:44 am

Because I gotta tell you that your evidence that one guy who helped write a bill, and left to join the industry that the bill is associated with is not proof of a manipulated market by those in power. Do you seriously want people writing laws that have no idea about the industry that they are involved in?

Posted by: Python

Python,

You kept another of my poorly worded post for framing. There's nothing poorly worded about your post here. Quite simply you've written off a trillion dollar tax give away by a man who IS NOT a pharmaceutical expert as being insignificant.

I just saw a vision and heard a voice…It was Friedrich Hayek relaying a message to me for you . He says, "YOU sir are a poser, you sir have lost any right to claim yourself a liberal economist".

Seriously….that's ridiculous!

Python August 17, 2007 at 9:34 pm

Muirgeo,

You say "He basically then wrote and used his connections to get the legislation passed over many other better bills.". Boy, he is connected alright to be able to get Congress to pass all of his ideas. I'm sure you are telling us the whole story of course.

It's amazing how you think a well-connected ex-Congressman can manipulate the entire legislative process, while simultaneously you wish to give more power to government. Does that seem strange to you in any way?

Do you understand the ingredients involved that lead to corruption? In case you don't, most agree that power and money are somehow involved. (sarcasm)Yes, and to eliminate it, let's send those with the power more money.(/sarcasm)

The question I asked you that started this particular line of discussion was when you were stating how the rich have increased their income when the rest have stayed level. I wrote:

"Please explain your statement: "I'm uncomfortable with that because I know it's NOT a result of "free markets" but is indeed the result of manipulated markets by those in power."

Please cite specific examples, and explain who you mean by "those in power". "

Maybe I'm dense, but talking about Tauzin/Pharma doesn't prove anything regarding the question. It's as if you are insinuating that current Medicare makes the top 1% richer but helps to keep the other 99% flat. If that is what you are suggesting, please explain how that all works. You said it, and I'm just trying to figure out if you remember what the topic is. I am fascinated how your mind works.

muirgeo August 18, 2007 at 10:20 am

Python,

You really are just being dense. First you keep telling me I wish to give the government MORE power which isn't true. I wish to give the people more power by making the government pay more attention to them as opposed to the lobbyist who they spend nearly every waking hour to please. Cutting the link of funding between lobbyist and congressmen makes government weaker and the market stronger. It's win win IMO and then now like explaining to a 5 year old I actually have to tell you how the outrageous story of Medicare part D makes wealthy people wealthier and the working middle class poorer? From your writing above you still seem in disbelief that the story is true. That's your held trump card for when I explain the obvious of how this transfers wealth from the workers to the rich then you can re-queston the story or claim it as just an isolated trillion dollar example.

Your argument is plain and simple that you trust wealth and lobbyist to make policy over the allowing people to decide. You think the people will always vote for more government which will take away from you.

Before I go on Python could you please tell me the sources of most of your information?

In the interest of full disclosure here's mine. I listen to Air America Radio. Mostly Thom Hartman. I also listen to NPR and the local conservative talk show host, I listen to Sean Hannity and Rush Limbaugh. I watch Keith Olberman and the Daily Show but I also regularly watch Fox, Hanniity and O'Reilly. I also watch PBS NOW and Bill Moyers.

I read the WSJ, NYT, Gaurdian, Washington post and times. I read the Economist and Mother Jones. I read Science and Nature magazines along with my professional Pediatric magazines.

I almost exclusively read conservative blogs. I check Drudge everyday as well as Huffington post and Think Progress. My most recent books were The Road to Serfdom and The Conservative Nanny State (free online). And I listen to almost every Econ-talk lecture here.

Python August 18, 2007 at 1:41 pm

Muirgeo,

Please tell me how you plan to fulfill your wish of: "I wish to give the people more power by making the government pay more attention to them as opposed to the lobbyist who they spend nearly every waking hour to please."

Please be very specific in how you will go about that.

And again, please feel free to show how Medicare is lifting the INCOME of the top 1% but keeping the other 99% stuck. In your original response you were talking about INCOME, but now you appear to be talking about expenses. Please be clear how Medicare is keeping the non-top-1% at a fixed INCOME level.

And it's amazing how you draw the conclusion that I want special interests to control government after all these posts to the contradictory. I want so little power in Washington that special interests won't have anything to lobby for. Remove the chickens and the wolves will go away. Reduce the size of government and lobbyists will go away.

And your desire to know where I get my information from is interesting. I rarely post "facts" here without citing links. Refuting your "arguments" doesn't require the background that I have. There are many of us here that can easily beat back your arguments, but you never take the time to read them deep enough to understand.

A few months ago, you were on a "regulate everything" kick. Nearly every post you wrote about included more regulations. When we told you that more regulation is an expansion of the government you changed your tune. Then you got stuck on a Universal Health Care thing and we pointed out again that it would increase the size of government. Today you say "First you keep telling me I wish to give the government MORE power which isn't true." But that is EXACTLY what you have said in dozens of threads. I don't need to get information from anywhere to know that you are full of something.

I get most of my information from cereal boxes and sales jingles.

I'll give you a little more insight however. I write testimony and work with California regulators and intervenors (those who represent the "people"). Our company's billion dollar budget is regulated at every level and I am involved in the process – though thankfully not one who takes the witness stand.

muirgeo August 18, 2007 at 7:49 pm

Python,

Several years ago I naively asked a lobbyist friend why a politician would bother to meet with him? I really meant it. At the time I had no idea. He simply replied, "money". I was blown away by what should have been an obvious answer because I always somehow assumed a politician wanted to meet with his constituents to see what they wanted him to do. I assumed there was no advantage or reason for him to meet with a lobbyist over one of his constituents. I now look back and I am amazed how ignorant and naive I was.

So the way to fix the lobbying problem is to make it the way I naively assumed it was years ago. A politician should have no finacial conflicts of interest when interacting with a lobbyist.

Some specific proposals.

- make it illegal to be paid to be a lobbyist

- make it illegal for corporations to donate to political caimpaigns

- make it illegal for lobbyist to donate to political caimpaigns

- make it illegal for lobbyist to give gifts to politicians

- make politicial contibutions limited to $100 dollars per year and only citizens can donate.

- "fundraiser diners would be illegal

- political caimpaigns should only be allowed 3-6 months prior to the election

- consider public funding/matched funding of polititcal candidates who pledge not to take political contributions

I'm not a constitutional laywer and all of these are not exclusive but just some general ideas on how to weaken politicians and simultaneously free up the markets.

Again money is NOT free speech. Bill Gates has just as much free speech rights to write or e-mail or meet with his congrsessmen as Joe Schmoe does…and no more.

Mesa Econoguy August 19, 2007 at 5:22 pm

Warren Buffett is a Graham & Dodd moron. Why anyone listens to him about taxes, or anything else, is absurd.

And BRKa is a mutual fund, not a stock.

Garrett Kester February 15, 2008 at 7:40 pm

We cannot depend upon the Federal Reserve to continue lowering the interest rates without any inflationary consequences. A new Home Owners’ Loan Corporation would be a very good idea with the current house market state being one of the large contributors to our near recession. Increased global regulations will also help stimulate our economy considering within the past couple of decades our balance of trade has switched to a trade deficit mainly from China. Income inequality definitely needs to be fought in order to encourage more spending than saving. Having an estimated $50 trillion debt to social welfare programs like welfare needs to be paid attention to before future generations are denied supposedly guaranteed financial support. FICA which helps to pay for social security and Medicare; and other payroll taxes which act as tax incidences, or the manner in which the burden of a tax is shared among participants in a market. Congress decided that FICA’s tax incidence should be shared between the firm and employees half and half, but research shows that lawmakers cannot so easily determine the distribution of tax burdens. In all, our economy will bounce back as long as precautions are followed correctly and future decisions considered with economic consequences in mind.
- This shows the need for a president which believes in a free market, which has been proven to lead to more economic growth

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