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With the election coming up, thought I'd raise the prospect of actually discussing some things of substance regarding both candidates rather than this silly crap about being a terrorist, a communist, Palin spending too much on her shoes, blah blah. Or at least stuff I want to blab about.
Taxes. A lot has been said about taxes, with the suggestion that Obama is somehow going to basically jack up taxes and take all our money. The data doesn't seem to support this; the main difference I see is in how they propose to redistribute the tax burden. McCain wants to disproportionately cut taxes for the rich, apparently under the old "trickle down" argument - i.e., that the rich provide the capital investment in this country, and that their investment will trickle down to lower income people. Obama's tax cuts primarily go to lower income people while increasing taxes for the upper income people. But in total, there is not a big difference between either of them.
I found this small piece to be insightful in summarizing the situation:
My observations:
1. You want to be careful about over-taxing the rich. It is true that they are disproportionately the drivers behind capital investment, and capital can go overseas quickly these days. And it is true that no nation has ever taxed itself into prosperity. Pools of capital remain deep when they are reasonably unencumbered from government intrusion so that they can be deployed in ways that innovatively take on risk and (hopefully) reap financial reward. That's the foundation. That said...
2. "Trickle-down" economics has not worked out as well as proponents had argued. There is a ton of data showing how the gap between the rich and the poor has disproportionately grown over the past decades, even as times have been good. Yes, some money trickles down...but not enough. And the gap is only getting worse and worse. I'm not saying that we should make it a policy to just take money from the rich and give it to the poor, but we need some way to address this growing gap, because it isn't good for society when it becomes excessive. I think it would be better to somehow intervene in the wage mechanism than in the tax mechanism because it lessens the direct involvement of the government hand in the process...but one way or another, people need to be able to get a living wage for their full-time work.
3. With our current deficit, I don't see how either of these candidates can keep their middle class tax cuts in place and pursue their spending projects. The Federal deficit is now approaching $1 trillion. I think as a percentage of GDP, that's the highest it has been since the second world war. I think I heard that both candidates would worsen the deficit by another $300-$400 billion - and I think McCain might even be a bit worse than Obama. But when our deficit is this high, I just start to think that we really do have to address it - and there are consequences to not doing so. One of the most important ones is the value of the dollar, given the fact that a lot of our government debt is in the hands of foreign nations. Like any other debtor-creditor relationship, if they get uncomfortable with our risk profile, they may require us to raise interest rates in order for them to still hold our debt. And the toughest part is that even though we had to make some of these expenditures, an overwhelming portion went to fund things that don't invest in our future, don't invest in health care, don't invest in schools or infrastructure - they went to war and to bailouts. We may need to continue to raise the deficit a bit more in the near term, but I'd like to hear more from both guys as to how they plan to address the deficit. There are really only two ways to do it: raise taxes and/or lower government spending.
My final $.02... If we take as a premise thast both candidates would worsen the deficit by about the same amount, I would rather take Obama's tax policy.
1. It's more appropriate for the current economic environment. When things are this bad, you really do have to turn to the wealthy to shoulder more under a progressive tax system. It's just a fact of life. To me, now is not the time to disproportionately lower taxes on the rich. And if you don't target relief for the middle class right now, you will have government bread lines soon. It's getting that bad.
2. if we're going to go into additional debt, I would at least rather do it for investments into the infrastructure of our nation - energy, healthcare, schools - rather than into useless foreign wars.
Taxes. A lot has been said about taxes, with the suggestion that Obama is somehow going to basically jack up taxes and take all our money. The data doesn't seem to support this; the main difference I see is in how they propose to redistribute the tax burden. McCain wants to disproportionately cut taxes for the rich, apparently under the old "trickle down" argument - i.e., that the rich provide the capital investment in this country, and that their investment will trickle down to lower income people. Obama's tax cuts primarily go to lower income people while increasing taxes for the upper income people. But in total, there is not a big difference between either of them.
I found this small piece to be insightful in summarizing the situation:
My observations:
1. You want to be careful about over-taxing the rich. It is true that they are disproportionately the drivers behind capital investment, and capital can go overseas quickly these days. And it is true that no nation has ever taxed itself into prosperity. Pools of capital remain deep when they are reasonably unencumbered from government intrusion so that they can be deployed in ways that innovatively take on risk and (hopefully) reap financial reward. That's the foundation. That said...
2. "Trickle-down" economics has not worked out as well as proponents had argued. There is a ton of data showing how the gap between the rich and the poor has disproportionately grown over the past decades, even as times have been good. Yes, some money trickles down...but not enough. And the gap is only getting worse and worse. I'm not saying that we should make it a policy to just take money from the rich and give it to the poor, but we need some way to address this growing gap, because it isn't good for society when it becomes excessive. I think it would be better to somehow intervene in the wage mechanism than in the tax mechanism because it lessens the direct involvement of the government hand in the process...but one way or another, people need to be able to get a living wage for their full-time work.
3. With our current deficit, I don't see how either of these candidates can keep their middle class tax cuts in place and pursue their spending projects. The Federal deficit is now approaching $1 trillion. I think as a percentage of GDP, that's the highest it has been since the second world war. I think I heard that both candidates would worsen the deficit by another $300-$400 billion - and I think McCain might even be a bit worse than Obama. But when our deficit is this high, I just start to think that we really do have to address it - and there are consequences to not doing so. One of the most important ones is the value of the dollar, given the fact that a lot of our government debt is in the hands of foreign nations. Like any other debtor-creditor relationship, if they get uncomfortable with our risk profile, they may require us to raise interest rates in order for them to still hold our debt. And the toughest part is that even though we had to make some of these expenditures, an overwhelming portion went to fund things that don't invest in our future, don't invest in health care, don't invest in schools or infrastructure - they went to war and to bailouts. We may need to continue to raise the deficit a bit more in the near term, but I'd like to hear more from both guys as to how they plan to address the deficit. There are really only two ways to do it: raise taxes and/or lower government spending.
My final $.02... If we take as a premise thast both candidates would worsen the deficit by about the same amount, I would rather take Obama's tax policy.
1. It's more appropriate for the current economic environment. When things are this bad, you really do have to turn to the wealthy to shoulder more under a progressive tax system. It's just a fact of life. To me, now is not the time to disproportionately lower taxes on the rich. And if you don't target relief for the middle class right now, you will have government bread lines soon. It's getting that bad.
2. if we're going to go into additional debt, I would at least rather do it for investments into the infrastructure of our nation - energy, healthcare, schools - rather than into useless foreign wars.
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