We Need to Raise Taxes on the Poor: It Will Help Solve the Debt Crisis
The negotiations over raising the U.S. debt limit have centered around tax policy—and in this realm, both Republicans and Democrats have proven themselves to be failed negotiators, not because they do not know how to bargain, but because neither side knows what it should bargain for. In my last column, I criticized the Republicans for their "no new taxes" pledge.
In my column this week for Defining Ideas, I direct my fire toward President Barack Obama and the Democrats for their equally rigid stance on taxation questions. As is well known, the president has also drawn his line in the sand; he has insisted that the new revenues needed to close the deficit must be obtained from either raising taxes on affluent individuals or raising corporate taxes. The vulnerable and needy are to be kept free from their share of the tax burden.
But rather than increasing taxes on the rich, as the president wants, we need to increase taxes on the poor. Our progressive system of taxation is a mistake—it is part of the reason why we are experiencing this fiscal crisis. Under a flat tax system, all income earners will have to foot their part of the bill for each new government program. I elaborate on these points over at Defining Ideas.
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Sep '10
Re: We Need to Raise Taxes on the Poor: It Will Help Solve the Debt Crisis
Your articles as usual are insightful and I do not find much to disagree with. However I view the tax discussion as almost beside the point. Collecting enough taxes to pay for a federal government that consumes 25% of GDP on top of state and local governments that consume another 20% is impossible absent a virtual police state, unless future generations are taxed (debt). Unless you are prepared to endorse the government coercion that would be necessary to collect the amount tax from current tax payers, discussing the best system to allocate the amount to be collected will remain academic at best. The long term choices are between drastic curtailments of liberty and drastic cuts in government. The continued use of debt may put this choice of for a while longer, but time is growing short. Many House GOP freshmen seem to understand this. I question if many others in Washington do.
Jun '10
Re: We Need to Raise Taxes on the Poor: It Will Help Solve the Debt Crisis
While the problem is basically one of overspending, I totally agree that out tax system has been a major factor in getting to where we are today. I would certainly support increasing taxes on the bottom 50%, even if only nominally, especially if revenue neutral. The benefits of such an idea have been discussed here and elsewhere many times in the recent past, and I'm convinced. But the politics of such a change would be extremely difficult, I'm afraid.
Oct '10
Re: We Need to Raise Taxes on the Poor: It Will Help Solve the Debt Crisis
1% Sales Tax. Everybody must pay. Everybody must have some skin in the game.
Jun '10
Re: We Need to Raise Taxes on the Poor: It Will Help Solve the Debt Crisis
If we applied our income tax strategy to combat military outfitting, we'd give the slowest-running 50% (determined by boot camp track times) the body armor, and the fastest 50% no body armor. Then we'd wonder why the average track times keep getting worse.
Edited on Jul 26, 2011 at 6:05amMay '11
Re: We Need to Raise Taxes on the Poor: It Will Help Solve the Debt Crisis
It'll never work. It reminds me of when I had to post duty rosters and one of the staff NCO's complained that his section was standing more duties than others. I explained that it was a percent, his shop had more people and thus stood more duties. It was simple math, I said. His very sincere response was that it couldn't be fair if I was using math.
That's the mentality we face. It'll never work. Once we surrendered that lower incomes would not be taxed, we doomed ourselves to being stuck with that solution because too many think that math isn't fair.
May '11
Re: We Need to Raise Taxes on the Poor: It Will Help Solve the Debt Crisis
I agree with your analogy, but I really wish we didn't have taxes or body armor either. It's okay in a defense, but have you ever worn any? The weight is oppressive and you can't hardly do anything with it on. I think we'd be seeing faster run times among those who want to really fight.
etoiledunord: If we applied our income tax strategy to combat military outfitting, we'd give the slowest-running 50% (determined by boot camp track times) the body armor, and the fastest 50% no body armor. Then we'd wonder why the average track times keep getting worse. · Jul 26 at 5:54am
Edited on Jul 26 at 06:05 am
Oct '10
Re: We Need to Raise Taxes on the Poor: It Will Help Solve the Debt Crisis
I agree. But I think part of the response is that the poor pay payroll tax.
Dec '10
Re: We Need to Raise Taxes on the Poor: It Will Help Solve the Debt Crisis
It's not so much that the poor pay nothing (which might be reasonable for the truly poor); rather, a vast percentage of the population which could contribute to the tax base does not and partakes of the many services government offers. The root of the problem is that we have way more government than we need or can afford. But, barring a real rollback of government, the only plausible solution is to flatten and broaden the tax base. I caused a little bit of a stir by suggesting much the same thing in a recent post.
Mar '11
Re: We Need to Raise Taxes on the Poor: It Will Help Solve the Debt Crisis
The recent census studies showing that the "poor" live in air conditioned homes, with big screen tvs and x-box's, point to the fact that we have watered down the meaning of poor.
I have compassion for the truly destitute. That said 50% of the country is not "poor" and most of our "poor" are living quite well from a historical view or looking at our "poor" compared to the truly poor in Africa or Afghanistan.
Much like Ricochet wants everyone to have skin in the game, more citizens need skin in the Federal Budget. If they are paying they will demand more clarity in what they are buying.
May '11
Re: We Need to Raise Taxes on the Poor: It Will Help Solve the Debt Crisis
No taxes on the poor is a political problem because people who are not taxed are unlikely to see themselves as having a stake in reducing the size of government. They do, of course, have a stake, because market inefficiency reduces economic growth and affects them--but that's not intuitive.
Sep '10
Re: We Need to Raise Taxes on the Poor: It Will Help Solve the Debt Crisis
You must mean people who do not pay income tax,, for the poor pay other taxes. What is your reasoning for this. Imagine the political problem we would have if we did away with the income tax and used a sales tax, or VAT. The poor would pay more, but everyone would be unlikely to see themselves as having a stake in reducing the size of government. I think not! .
Dec '10
Re: We Need to Raise Taxes on the Poor: It Will Help Solve the Debt Crisis
Mr. Epstein, A sincere thanks to you and Mr. Yoo for the many lessons learned on the law podcasts, the best part of Ricochet, my disagreements with your positions on some of the issues notwithstanding.
I am in favor of the flat tax because of its relative simplificity and the reduced overhead that it represents; however, whatever tax structure is put in place, the Democrats first, then Republicans will find a way around it to buy votes: rebates, food stamps, etc.
It can be shown that the poor always pay either directly as you propose or indirectly - if taxes are higher on corporations and job creators, then the corporations will necessarily have to charge consumers higher prices to adequately cover their costs.
The smallest gov't possible will require the lowest overall tax revenues. Tea Party and some Republican, at least my, opposition to any tax increases is based on the need to starve the beast as soon as possible, and force the necessary downsizing.
In the part of the real world where I live I don't see any other way to save the country, than to hold firm on any and all tax increases. Wish it was different.
Jul '11
Re: We Need to Raise Taxes on the Poor: It Will Help Solve the Debt Crisis
I agree completely with everybody footing a part of the bill. However, allow me to play the devils advocate for a moment.
Assuming we raise taxes on the poor, might that not empower and enable demand for increased services; What would keep many of them from saying "Now that we are paying taxes, we demand these services; we have a right as tax paying citizens!"
What needs to happen is for spending to be linked to taxes, much like at the local level. A county can raise bonds or taxes for specific initiatives and people will see that connection. I do not see that happening at the federal level; it's too big, too diverse and too contorted.
The real answer is less federal government, period. It should only do what the states are not capable of doing, and it should link all it's expenditures to it's revenues as much as possible. And, of course, everyone should have some skin in the game.
-E
Edited on Jul 26, 2011 at 10:58amFeb '11
Re: We Need to Raise Taxes on the Poor: It Will Help Solve the Debt Crisis
CandE: I agree completely with everybody footing a part of the bill. However, allow me to play the devils advocate for a moment.
Assuming we raise taxes on the poor, might that not empower and enable demand for increased services? What would keep many of them from saying "Now that we are paying taxes, we demand these services. We have a right as tax paying citizens!"
What needs to happen is for spending to be linked to taxes, much like at the local level. A county can raise bonds or taxes for specific initiatives and people will connect that. I do not see that happening at the federal level; it's too big, too diverse and to contorted.
-E · Jul 26 at 10:42am
I think it more likely they would become more careful what they asked for, because they might have to pay for it. They might also be discerning as to the quality and effectiveness of the services.
Dec '10
Re: We Need to Raise Taxes on the Poor: It Will Help Solve the Debt Crisis
CandE: I agree completely with everybody footing a part of the bill. However, allow me to play the devils advocate for a moment.
Assuming we raise taxes on the poor, might that not empower and enable demand for increased services; What would keep many of them from saying "Now that we are paying taxes, we demand these services; we have a right as tax paying citizens!"
What needs to happen is for spending to be linked to taxes, much like at the local level. A county can raise bonds or taxes for specific initiatives and people will see that connection. I do not see that happening at the federal level; it's too big, too diverse and too contorted.
The real answer is less federal government, period. It should only do what the states are not capable of doing, and it should link all it's expenditures to it's revenues as much as possible. And, of course, everyone should have some skin in the game.
-E · Jul 26 at 10:42am
As it is, the government is a charity organization to many. However, unlike normal charities, those contributing do so because of the inherent threat of violence from government.
Mar '11
Re: We Need to Raise Taxes on the Poor: It Will Help Solve the Debt Crisis
CandE:
Assuming we raise taxes on the poor, might that not empower and enable demand for increased services; What would keep many of them from saying "Now that we are paying taxes, we demand these services; we have a right as tax paying citizens!"
-E · Jul 26 at 10:42am
Edited on Jul 26 at 10:58 am
We currently provide food, housing, medical care and some level of general spending money, exactly what additional services are you presuming could be provided
Edited on Jul 26, 2011 at 12:35pmJul '11
Re: We Need to Raise Taxes on the Poor: It Will Help Solve the Debt Crisis
ShellGamer
think it more likely they would become more careful what they asked for, because they might have to pay for it. They might also be discerning as to the quality and effectiveness of the services. · Jul 26 at 10:59am
You and I would think this way because we recognize that government programs must be funded with our money. We see it as an exchange: my taxes for your programs. I fear that liberals and their brainwashed masses would not see it that way, but rather as dues which give them the right to demand more.
At the root of this mentality is the fact that at the federal level, we just don't talk seriously about where the funding will come from when start another program. If the funding for, say, medicare was solely from payroll receipts (like it should be), then we might expect people to be rational about spending. Since, however, that is not the case, I don't trust liberals to not turn "skin in the game" into an argument for yet more programs under the guise of "getting our money's worth"
-E
Jul '11
Re: We Need to Raise Taxes on the Poor: It Will Help Solve the Debt Crisis
Jager
CandE:
Assuming we raise taxes on the poor, might that not empower and enable demand for increased services; What would keep many of them from saying "Now that we are paying taxes, we demand these services; we have a right as tax paying citizens!"
-E · Jul 26 at 10:42am
Edited on Jul 26 at 10:58 am
We currently provide food, housing, medical care and some level of general spending money, exactly what additional services are you presuming could be provided · Jul 26 at 12:35pm
Edited on Jul 26 at 12:35 pm
I'm confident that people can ask for much, much more. How about a car, cable TV, a computer, internet, A/C, etc. Many of these are things that I've seen government subsidize, provide or mandate before. The sky is the limit!
-E
Nov '10
Re: We Need to Raise Taxes on the Poor: It Will Help Solve the Debt Crisis
Geez, so do we all!
Nov '10
Re: We Need to Raise Taxes on the Poor: It Will Help Solve the Debt Crisis
I question whether a flat tax system (as defined by Steve Forbes) would unduly punish property owners?
Perhaps, a non-graduated income tax rate with deductions for business and property owners would advantage the productive.