Popular post on "the poverty line"

 NoEnzLefttoSplit wrote:

lol I was about to ... oh there's a disclaimer because "to better compare trends." 

 R_P wrote:

I'm pretty sure there is a kernel of truth somewhere in this argument but that is an absolutely abysmal choice of graphs to illustrate it.

China has brought millions out of poverty. The US has not – by choice
Despite the US’s economic success, income inequality remains breathtaking. But this is no glitch – it’s the system

And yet, a summary glance at the Trump administration’s main initiatives – the president’s Big Beautiful Bill Act and his indiscriminate tariffs, which will raise the price of many staples and produce a drag on business spending and employment – underscores how the US’s dismal performance at sharing the fruits of its success with the less well-to-do in its society is not some bug in American capitalism. It is a feature.

The legislation will take health coverage from millions of people and dramatically raise healthcare costs for millions more through massive cuts to Medicaid and the health insurance subsidies under the Affordable Care Act. It will trim hundreds of billions from the Snap nutrition assistance program for the poor. Altogether, the latest estimate by the Budget Lab at Yale finds that the impact of Trump’s tariffs and his big, beautiful bill will trim household income for all except the richest fifth of American families. The bottom 10% would suffer a 7% cut.

Sure, America’s indifference towards its poor did not appear suddenly during the Trump administration. It’s been a feature of Democratic and Republican governments over the last 50 years, letting appeals to market efficiency trump calls to address the US’s growing inequalities. Since Jimmy Carter left office, the income of the rich has grown more than that of the poor in every administration except that of Bill Clinton and, yep, Donald Trump’s first, when subsidies to respond to the Covid pandemic raised incomes across the poorer half of the population.

What’s telling is that despite Trump’s claims to represent the common American worker trodden upon by indifferent economic forces, he is out to exacerbate the ills of American capitalism. The millions of angry Maga followers applauding Trump’s swipes at an unfair global order will eventually come to find that the rhetoric may have changed, but the US is not about to change the way it shares its riches.

 ScottFromWyoming wrote: 

Yeah, I'd agree with that thinking. But again: the $10K earner who has to shift from a progressive income tax to a 10% income tax rate will have to make very hard choices because s/he can't afford as much food or heat or medical care—the necessities. Flat income taxes hurt the poor more than the rich. 

I'll make a cynical guess and say this: I think that the federal income tax schedule is highly susceptible to political influence. If you take a look that the instructions for the 1040, they're a welter of carve-outs and exceptions and strange tax-saving provisions. The instructions are a political document, a form of tax-related gerrymandering that caters to the rich and powerful. My guess is that even if you could pass a flat income tax in the US, the rich and powerful would find ways to defer taxes on their income, or re-define their wealth away from income towards investment earnings, or claim their income from "vital" industries should be taxed less, etc. 


I think our taxation systems are always going to be susceptible to gaming and influence. 


BTW—did anyone watch "Friday Night Lights" the TV show? There was a brilliant scene or two about rezoning the town's (Dillon) school districts. The big football boosters were up in arms because the new rezoning had excluded a number of places that had long been sources of great football talent from Dillon's district. So the boosters gather in the backroom of a bar and re-draw the zone lines, zigging over onto Hobart Street to include the Jones brothers (promising linebackers!) and zagging onto Darlington Road to pick up members of the extended Jackson family...

The zone lines turn into something like the tracks of a wandering, drunken ant. The upright football coach hears about this meeting to "fix" the zone lines and drops in to see what the hell is going on. The boosters politely tell him that they've got the matter in hand and that Coach should find somewhere else to be. And yes, the "fixed" school district zone lines get approved. 

 pigtail wrote: 
What she said 

 kcar wrote:
 
 
A $1M earner who faces a new tax of 10% will save less, but spending will be generally unaffected, unless they were already living beyond their means (not inconceivable in some locations).  They may say they put off buying a new car for a year or two to keep saving at the pre-tax rate, but my understanding is that is relatively rare in the short term. The $10K earner who's now taking home only $9K will spend $1K less than before, but in either case, will spend 100% of available income.

 islander wrote: 
Interesting......thanks :)

 haresfur wrote:
 
Nick Hanauer has some interesting things to say about this, and he's certainly from a different perspective than most of us.

https://www.forbes.com/sites/r...

 kcar wrote: 
shrugs.........Sounds better than what is going on now.  We have these so called progressive taxes but the rich get the benefit of infused loopholes and the working class pays the bulk.  Those who are poverty stricken supposedly get relief from our social programs that are paid with taxes.  The problem as I see it, is we are not paying taxes fairly on a progressive plane either.  Something's gotta give.  What will the rich and top 1% do when the working class are finally poverty stricken as well?  When there is no one to collect taxes from, it will get real urgent, real fast.

 kurtster wrote: 
And if you are black you are still dealing with the consequences of slavery and the system of bigotry that grew out of it.

Yeah, if you are white, of southern heritage, and rich ancestry, you surely did and continue to benefit from the sins of your predecessors. If you are white and poor, you didn't benefit as much but continuing to prop up your precarious existence by keeping other people down is foolish. There is plenty of capital available to the South these days so the consequences are really in the imbedded culture that refuses to change.

 wallacehartley wrote:

 

 wallacehartley wrote:

 

 miamizsun wrote:

 miamizsun wrote: 


Again (I think), for the most the United States doesn't have an issue with manufacturing prowess or innovation. Last time I checked, the US is still the largest manufacturer in the world and the leader in number of patents granted. Our national debt is not hampering our ability to produce or innovate. If you disagree, please provide evidence. 

Our national debt is caused by, in part, an unwillingness to collect more tax revenue and/or cut big parts of our budget—Social Security (plus unemployment and labor) and Medicare plus heath (23% of mandatory spending apiece and 15% of total spending apiece), and military expenditures (over half of discretionary spending). I'm getting these percentages from here: 


https://www.nationalpriorities.org/budget-basics/federal-budget-101/spending/


This page also notes that the dollar amount of all annual tax breaks provided by the federal government is larger than the dollar amount of annual discretionary spending. The chart on this page refers to the 2015 tax year, so I don't know how the 2018 tax "reform" changed the chart. I expect tax breaks actually grew in dollar amount because of the 2018 law. But if we were less reluctant to get rid of most or all tax breaks, we'd borrow considerably less money. 
Another reason for our large national debt is the ease with which we can borrow money and the irresponsible tax cuts of GW Bush and Trump. 
I think this is your main point: 


"the last thing we need is policy that discourages/punishes producers/creators"


I assume you think that our regulatory environment is too harsh or restrictive. I don't think it is. Neither does Martin Feldstein: 

Why the U.S. Is Still Richer Than Every Other Large Country
...

In short, the U.S. remains richer than its peers. But why?

I can think of 10 features that distinguish America from other industrial economies, which I outline in a recent essay for the National Bureau of Economic Research, from which this article is adapted.

...

*   Labor markets that generally link workers and jobs unimpeded by large trade unions, state-owned enterprises, or excessively restrictive labor regulations. Less than 7% of the private sector U.S. labor force is unionized, and there are virtually no state-owned enterprises. While the U.S. does regulate working conditions and hiring, the rules are much less onerous than in Europe. As a result, workers have a better chance of finding the right job, firms find it easier to innovate, and new firms find it easier to get started.
*   A favorable regulatory environment. Although U.S. regulations are far from perfect, they are less burdensome on businesses than the regulations imposed by European countries and the European Union.

 pigtail wrote: 
It does not address pre-tax maldistribution of income, and it does not correct post-tax maldistribution of income. That is why the flat tax idea is so popular with libertarians.

 pigtail wrote: 


A flat income tax is effectively regressive—it is more onerous to people making little money than it is to people making a lot of money. 

If you make $10K/year and are taxed @ 10%, you only have $9K of disposable income. That income reduction can be disastrous for someone living on an economic knife-edge: it can make purchase of necessities like food, rent, medicine almost impossible. 


If you make $1 million/year and taxed @10%, you have $900K of disposable income. That income reduction probably won't alter your lifestyle except possibly for big-ticket purchases. Certainly it won't affect your ability to pay for necessities. 


The US has long sought to have progressive income taxes. Republicans have long complained that such taxes are disincentives to rich people who (supposedly) drive job growth in the US, or are attacks against the moneyed classes. Progressive income taxes are no such thing. They're an attempt to pay for necessary goods and services (like schools, police and fire depts) by taking disproportionately more money from people who can afford to pay more. 


There may be in tax-schedule calculations an attempt to ensure that the rich feel the same financial pinch as the poor do when paying taxes. For instance,  a $1 million/yr earner may reduce her spending by 5% if she has to pay $250K in taxes while a $10K earner may reduce her spending by 5% if she has to pay $1K in taxes. They pay different rates of income tax but reduce spending by the same amount. I don't know if that equality is a desired target for governments when calculating tax rates. 


Here's a brief summary of progressive vs. flat taxes: https://www.investopedia.com/ask/answers/042815/progressive-tax-more-fair-flat-tax.asp

BTW: we do have many flat taxes in this country, eg. sales taxes on food or prepared food, gas, etc. 

 miamizsun wrote:  How about a flat income tax across the board for everyone?  If you make 50k you pay 10% or whatever the optimal percentage would be.  No deductions for this or that just a flat income tax percentage for all.  You make 50k you pay 5k.  You may 5mil you pay 500K.  I'm sure there will be arguments saying this or that is wrong with a flat tax so what is it?

 kcar wrote: 

it's ok to be skeptical

and i agree about efficiency in every possible way (and i think you can see some of my posts in the green/tech threads)

what i'm saying is that at the hands of politicians we have massive debt, deficits and unfunded liabilities

further if you look at the past estimates that politicians have made regarding any major social spending program like social security, medicare, rx drug program, war, etc., they have been drastically wrong

it's painfully obvious that they're just not good at this (budgeting and estimating costs)

government literally has no money, they take it/get it from us and when they (want to) spend more than they've collected, they borrow/go into debt

what is debt? debt is simply a claim/tax on future production of the producer/taxpayer

someone borrows money that they do not have with a contractual/structured plan to repay it from future earnings

the demographics aren't in our favor either, the baby boomers who have been at their peak earning and producing years funding these programs, are beginning to retire and are going to seriously drawn down/lean on these programs

so these programs have gone through their zenith of funding (accumulation phase) so to speak, and now are going into the payout phase

these programs are going to be stressed in a major way

we need to encourage strong production and innovation (or as much as possible) if we want to collect taxes to help offset this

the last thing we need is policy that discourages/punishes producers/creators

there are other variables we can discuss but i hope you get my point

regards

 miamizsun wrote: 


I am highly skeptical that the relative skimpiness of the USA's social welfare safety net is due to an inadequate "production system" or over-regulation. You apparently assume that the insufficient money spent on social welfare in this country is due to high costs of goods and services and not a reluctance to expand social welfare programs. 

You have a point if we're talking about healthcare and housing costs but those costs aren't restricted or caused by attitudes about social welfare programs. We could reduce our housing costs by changing the production system—not to increase its "robustness" but to increase its efficiency. I saw one news piece about construction costs rising so high in places like San Francisco that the developers estimated per-unit construction costs approached $800K. Some developers were responding by relying on off-site pre-fab construction methods. 


https://medium.com/sidewalk-talk/when-affordable-housing-starts-in-a-factory-20bad64d4fe0


https://www.nytimes.com/2018/06/07/business/economy/modular-housing.html