David R. Henderson  

Marginal Tax Rates Will Rise

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As I have been saying for the last month or so, when I saw the details of the tax rebate (and I'm sure other marginalists have been saying so too), under the "stimulus" bill that President Obama will sign today, marginal tax rates for some of the most-productive people in the world will rise.

That's what happens when the government gives a rebate or a tax credit and then phases it out above some income level. Marginal tax rates rise for the range of income in which the phaseout occurs. This happened in the 1997 Clinton tax bill too, and I wrote about it in Fortune. Unfortunately (pun intended), the headline that Fortune gave it was "Tax Bill Increases Taxes." The correct headline would have been "Tax Bill Increases Marginal Tax Rates."

How much will marginal tax rates increase? The Wall Street Journal gave the data today. For single taxpayers (the WSJ says "workers" but I'm not sure you need to work to qualify) , the rebate phases out after $75,000 of income by $20 for every additional $1,000 of income. The tax credit for singles is $400. So for singles in the income range from $75K to $95K, marginal tax rates in income will be two percentage points higher. For married taxpayers, the tax credit is $800; it phases out after $150,000 of income by the same $20 per $1,000 of income. So for married taxpayers with income between $150,000 and $190,000, marginal tax rates will be two percentage points higher. Of course, singles making between $75K and $95K and couples making between $150K and $190K are among the most productive people in the country and, therefore, in the world.


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COMMENTS (42 to date)
Dave writes:

The loss from increased tax rates depends on worker elasticity, not productivity, right? (Or maybe elasticity * productivity or something.) Are there any stats on labor elasticity as a function of income?

John Thacker writes:

The bill does contain yet another AMT patch, not that that helps us single renters.

(And arguably the AMT is better than the normal tax system anyway; lower rates but fewer deductions.)

RL writes:

DH,

I don't follow. If you're a productive high-earning individual, who paid x% in taxes before, are you now going to be paying (x+2)%, or is it simply that you won't be getting a rebate that other less productive people will be getting?

In other words, if your income and expenses are identical to the previous year, won't your tax be the same, not higher because of a rebate you don't qualify for?

If you walk down the street at night with a friend and a mugger takes your wallet but not your friend's, are you worse off than if he had taken both wallets?

David R. Henderson writes:

RL,
All good points, but they don't address my point. Let me use your mugger analogy. The mugger tells you in advance that if you walk down the street with more money in your pocket, he'll take a higher percent of it. You'll have an incentive to carry less money. (This is a stretch because if you knew you'd be mugged, you probably wouldn't walk down the street. I'm just trying to fit it in your analogy.)
The reason I'm raising the issue is that the "stimulus" bill reduces the incentive to make money if you're in this income range.
David

Ned Baker writes:

Marginal tax rates, huh? What about marginal propensity to consume? I suppose you'd favor a stimulus rebate targeted at those of us hoarding cash and Treasuries, who are owners of factories, stores, and equipment which are currently sitting idle? Cry me a river...

El Presidente writes:

David Henderson,

. . . [T]he "stimulus" bill reduces the incentive to make money if you're in this income range.

Relative to what?

If you are arguing for flatter rates, that's one thing. But that doesn't mean this bill will cause top marginal rates to rise. It simply means the rate of increase in marginal rates changes along the same income spectrum. These are not the same thing, and the boogie-man can't make it so. We all know you're a passionate supply-sider but passion doesn't change math.

If you haven't simply made an error in basic arithmetic, your argument betrays a fundamental truth of the theories you oppose: our culture defines wealth as power to command the resources of others. When needs and desires go unmet, wealth consists of little more than relative disparity in ownership, the way you treat it. If you are arguing that the rich and the poor are insufficiently antagonistic, I am intrigued. I never thought I'd see the day when a libertarian economist would parrot dialectical materialism. :-)

[M]arginal tax rates for some of the most-productive people in the world will rise.

How do you define productivity, and what technical process do you use to attribute it to individuals?

DF writes:

having a high income doesn't always mean having high productivity.

dong writes:

I'm with RL here, I don't follow your argument that your marginal tax rate has increased. Using the mugger analogy, it seems the mugger has not changed what he was already going to take from you which was already announced. The incentive for you to carry less money remains the same.

Darren Hudson writes:

Folks, this is not rocket science (there is a reason why physicists call economists simpletons). No, in fact your actual tax check to the government is not any higher. What David is saying is that the gent in the lower tax bracket who receives a rebate has a lower effective tax rate than previously. So, relatively speaking, your tax has increased relative to the other person. Therefore, it weakens the incentive to continue to be in the higher bracket. This would happen if the reverse were true...that is, the other gent stayed where he was and your tax went up...same thing.

This is pretty simple math. The real question is HOW MUCH does it weaken the incentive. My guess that the rebate (raising my relative rate) will not attract me downward to the same degree that raising my tax rate (making me actually pay more) would. But that is an empirical question.

RL writes:

Darren, you argue well, but I should note it's I (and likely dong) who is NOT an economist; the economist, Dr. Henderson, got it right. So I don't know why you think the remark about what physicists think of economists is appropriate.


The Student writes:

And is there a problem with raising marginal tax rates? I'd like to see a convincing analysis that raising the marginal tax rates on highest earners actually reduces their amount of work.

Can an NFL player work less because of high tax rates? Does a salaried investment banker quit his job because, gosh darnit, that extra two percent of his income is what really got him out of bed in the morning?

There is no such analysis because everyone knows that the truly rich don't work solely for income's sake, and the one that do aren't going to work less. The incentives argument is total BS for those at the high end of the income distribution, and everyone but right wingers know that. This idea is built around the most narrow definition of homo economicus, and ignores that people can't just reduce work, and ignores the way people actually are.

If you'd like to make the argument that it's wrong to increase the tax burden of the rich because they pay "too much", that could be a legitimate argument, but one I'm still willing to have. But to try and claim that a marginal 2% increase in the taxes the rich pay will have anything more than a negligible impact on their working habits is preposterous.

And with that, I leave this link
http://lanekenworthy.net/2009/01/05/how-progressive-are-our-taxes/
Keep in mind that for the four years of the bush administration after this graph, our tax distribution became less progressive.

Darren Hudson writes:

RL:

Actually...I am an economist. I am just realistic about our mathematical and model building skills. I do not have the inferiority complex some of my colleagues have relative to the "hard sciences." I figure if we cannot laugh at ourselves...someone else surely will do the job for us. So, it was certainly not meant as a slight to you or me...

Biomed Tim writes:

@ The Student,

I'll see your link, and raise you this:

http://gregmankiw.blogspot.com/2008/02/are-taxes-really-distortionary.html

The Student writes:

See, where as mine is a statistic put forth by the CBO, yours is, no offense, BS put forth by an economist many would considered absolutely compromised by his political views, who also wouldn't even be relevant if he didn't have exceptionally good instincts in writing textbooks.

I think the CBO wins.

ALso, if I may ask to the whole crowd, one of the first things learned in Intermediate Microeconomics is that there is always a trade off between work and leisure. And more so, that beyond a certain point, as an individuals wages increase, they are likely to work less and pursue more leisure.

If such a thing is true (and because I have Mankiw's textbook in front of me, I hope he wasn't lying), would increasing taxes on the wealthiest in fact induce them to work harder in order to achieve the same level of income. Wouldn't we in fact be pushing them down to a lower level on the labor leisure curve in which their incentives to work are greater?

VH writes:

I'm in this range, near the middle of it.
My incentive to earn what I do hasn't gone down noticeably, however my resentment of welfare has gone up, which may be related.
Additionally, money is not the only thing I get out of working. I think any hit on incentive will be minimal. I don't think the rebate is a good idea, but rewarding people earning up to 2 or 3 times the average household income for continuing to hold down jobs that pay fairly well seems ridiculous.

Regardless, I would rather earn 95k and not get a $400 rebate than earn 75k and get the $400.

The biggest hit on these wage levels' motivation is going to be all of the "no merit wage increases" that so many of the Fortune 500 seem to be implementing for the forseeable future. That's 2-4% less overall salary, every year, which is much more demoralizing than a smaller government handout.

8 writes:

They don't work harder, they just shelter their income. When marginal rates were high there were tons of loopholes. The government can close the loopholes and raise taxes, and then we'll see what happens.

Also, think of leisure as a benefit. Imagine I can have $5 worth or leisure or $20 of cash for work. At a 75% tax rate, I'm indifferent between work and leisure. Think of the people who quit corporate jobs paying six-figures to teach English, travel, study or volunteer. Higher tax rates make these choices relative attractive.

Also, it sounded as though you conceded the general argument, but believe the marginal effects of a 2% increase will not negatively offset the revenue increase, essentially arguing we're on the left hand side of the Laffer Curve. Your last comment sounds as though you are saying there is no marginal effect because the argument is bunk.

anonymous writes:

Dear Student,

My wife and I are in the allegedly enviable position of earning about $400,000 per year. She out-earns me by about 30%.

We are seriously considering having me leave my job to pursue other less productive interests. The reason is simple.

We work hard, we are extremely productive, and we pay a tremendous amount of tax.

So yes, in aggregate, some portion of the population will choose to work less because of excessively progressive taxation.

Let's say I work a little harder, and get a $20,000 raise. Mentally I automatically lop off half of that due to taxes. Now that $20,000 raise is only $10,000. We already earn quite a bit of money, so the price I put on my leisure time is correspondingly high. Working a little harder for $10,000 just doesn't seem worth it. Working a little less hard and earning less money, on the other hand, is extremely appealing.

This is the danger of progressive tax rates. You are punishing behavior that you want to encourage. It's like charging people extra money for eating celery and exercising.

Les writes:

If you are not an economist, here is another way to look at this. Singles making over $75k and marrieds making over $150k per year get a federal tax rate increase. The great majority of all federal taxes are paid by these tax brackets.

So the federal government is taking money out of the private sector. But the private sector, not the government sector, is where productive investment is made and wealth and jobs are generated. That will worsen an already serious recession. In fact, it is probably one of the worst things that could be done in a recession.

The Student writes:

Les, if you had actually followed my link, you'd see your argument is total bunk. The Top quintile brings in 53 percent of all income and pays 56% of all taxes, which is not that amazingly progressive.

To Anonymous, would lowering your taxes by a meager 2% give you more incentive to stay at your job? As you yourself have said, you were already considering quitting your job to begin with. And whether or not you leave your job is irrelevant anyways, there is someone willing to take that job, who may in fact try harder than you because he desperately needs the money.

In fact, one could make the argument that by forcing out the people who aren't committed to their jobs, you could raise marginal productivity by giving those jobs to people who value them more highly, and thus are willing to work harder.

To Eight, my general text is as above.I would like to see someone who could put forth a rational argument that proves that higher tax rates (at our point) would in fact reduce total output. You use an argument of 75%, which is effectively reductio ad absurdum. Of course improbably high tax rates reduce the incentive to work. But I would like to see proof that a tax rate increase from our current back to the pre-Bush of 40% would
1. Reduce total Output
2. Reduce the MPL of the top income bracket
3. Reduce Government Revenue

I think we are clearly on the left hand side of the Laffer Curve. But there is no clear evidence that even if we are, Total output would diminish. Forcing out those who aren't committed to their jobs may in fact increase output, as people who will work harder take them. And those at the really tall heights of the income bracket aren't working for monetary benefit anyways. If you're making twenty mil, you aren't going to quit your job and go teach because the government decided to take 5 mil rather than 4.

lukas writes:

Les, you do realize the difference between marginal tax rate and tax rate, don't you? Their total tax burden does not increase, in fact it decreases if they earn less then $95K/$190K. What does increase is the tax on every additional dollar that they might hypothetically earn.

/Not an economist.
//But I'm pretty sure I got this one right. ¡Viva la revolución marginal!

Mr. Econotarian writes:

While the marginal rates are going up now, and I concur they will have a marginal effect on labor, I am more afraid of the eventual absolute rise in rates needed to pay for the $800 billion of debt.

Based on income tax incidence, that is at least $60,000 NPV for me...

MW writes:

Haven't read all the comments, but phasing out tax rebates is mathematically identical to increasing marginal rates in one group and decreasing marginal rates at a lower income.

Say we have a 5k tax credit for everyone who earns under 40k and its phased out to 0 for people earning 45k. Doesn't sound too bad, does it? But say the marginal rate from 0 to 45k is 25%. Somebody making 40k pays 10k in marginal taxes and gets a 5k refund, paying 5k in taxes and taking home 35k. Somebody making 45k pays 11.25k in taxes but gets no refund, taking home 33.75k.

Yup, somebody whose income goes from 40k to 45k actually LOSES take-home pay in this extreme scenario. In practice, workers under this system would plead employers for perks and benefits as opposed to a pay increase, at least until the pay increase starts overcoming the loss of the tax credit. Such a system would cost the government a tremendous amount of money, losing the additional marginal taxes not to mention still paying the tax credit to the person who earns 40k but could be earning 45k.

It won't get this bad, but Obama will make the tax code MUCH more progressive. I'm not sure if higher marginal rates really do decrease the marginal incentive to work, but workers and employers will certainly have more propensity to find ways around paying income taxes.

TJ writes:

The Student wrote:

"See, where as mine is a statistic put forth by the CBO, yours is, no offense, BS put forth by an economist many would considered absolutely compromised by his political views, who also wouldn't even be relevant if he didn't have exceptionally good instincts in writing textbooks."

Isn't it convenient when someone can be completely ignored due to his political views? That way we can ignore half the people in the country!

The Student writes:

THe Lengths to which conservatives will go to defend their false axioms are ridiculous.

So, we have on one hand Mankiw, a staunch conservative, off hand say that the rich pay too much taxes.

On the other hand, we have an actual statistic describing what actually was the incidence of taxes in the United States in 2004.

One is biased, has no proof, and should not be trusted.

One is AN UNDENIABLE METRIC, FROM AN UNBIASED SOURCE, WHICH DISPROVES the rather ridiculous "conventional wisdom" that the rich pair an "unfair" portion of taxes.

Wow...

dong writes:

I plead some stupidity to my initial comment as I confused "marginal" in the tax sense (i.e. what the last effective bracket is) versus "marginal" in the economic and mathematical sense. While absolute marginal tax rates (in the tax sense) are not increasing, i.e. nobody is actually paying more in taxes, the tax credit introduces a kink in the phaseout range that effectively increases the marginal tax rate within that range. That light bulb turned on a bit slow.


If you believe that the higher marginal tax rate has the effect of curtailing productivity, it should only really affect those in the phaseout range (e.g. single filers making between 75k and 95k). Those making much more (i.e. the so called most productive members of society making in excess of a couple hundred thousand) are unlikely to be affected as their effective marginal rate would be unchanged.

On another note, I remain very unconvinced that slightly higher marginal tax rates on top income earners has a detrimental effect. 1) I doubt most top earners would actually curtail their income producing activity because the marginal rate goes from 33% to 35% (though at some level, I do believe that there would be major scale back - there is some "optimal" level. 2) I believe many people who were incentivized to earn less would actually end up doing good but less lucrative activities - working for a non profit, creating art, pursuing public service, etc. How much one earns is only one measure of productivity.

calwatch writes:

But I am right at that level of $90,000 gross income. What I am doing is deferring the income using my 457 and a Flexible Spending Account, and realizing my capital losses immediately. I've always maxed out on deferred compensation anyway so its not much of a loss. But the person who just got a promotion will end up saving more money so they can still take the child tax credit, the stimulus credit, and so forth. It's good for them long term but bad for the economy short term since they're not spending it. The other thing is that everything phases out at once at that level - child tax credit, itemized deductions, tuition and fees credit, etc. Since I take the tuition and fees credit and perhaps will take the first time homebuyers credit, you bet your life I'm going to think twice about taking overtime (or at least taking it in cash). Less money for the tax man, but more leisure for me.

Early Retirees writes:

Although n=2 does not a statistic make, both my husband and I recently chose early retirement from careers in cancer research and third world development. Although we both enjoyed our careers, taxes are so high that there is no strong financial reward, and we felt that our time is better spent tutoring our teenagers. (Most schools here are weak.) High local, state, and federal taxes definitely play into the psychology of life decisions of high achievers. Now we are also cutting our spending, saving up in anticipation of supporting our kids and parents in the upcoming deteriorating economy and socialized, rationed healthcare.

Anonymous This Time writes:

Early Retirees probably win twice, because they'll look tremendously poor for college financial aid.

I've been looking over the financial aid worksheets (I'm still ten years out), and middle-class workers face a 40 per cent marginal tax rate on their post-tax income.

So if one were to go from $80,000 to $90,000 in gross income, Federal and FICA would eat about 1/3 of it, and the college 40% of what is left over, leaving one with an actual increase of just $4,000.

Dave writes:

Student: Hmmm, I introduced your point in the first comment but no one responded, even DH. Maybe I was too technical.

Anyway, since everyone's giving their own personal data, I'm one of those medium-high-earning people that would see a bit higher marginal rate. I don't think it will affect my behavior because I am young, I have no stored wealth, I love my job, and I have almost no willingness to work more or accept worse working conditions in exchange for more money.

But my girlfriend just negotiated a permanent lawyering job in exchange for her contract gig, which means more minimum hours and more money. The decision was a close call, so I could see tax changes making a difference in her decisions.

I should point out that I think that the stimulus plan will ultimately be destructive, mostly because I don't trust Congress at all, so I am cognitively primed to expect at least some negative effect from the tax changes.

Anonymous writes:

THe Lengths to which conservatives will go to defend their false axioms are ridiculous.

And there is no lengths to which socialists will go to convince us that highly productive people wish to be enslaved.

I own my business and I can choose to work more or work less. Since my business is stressful, if you continue to raise my taxes, I will choose to work less. I will also fire some of my employees because I won't be as productive. My propensity to do this increases with every unit increase in the tax rate. I may not do this now, but the people at the margin will and one day I might be at the margin. I will also divert much of my investment to tax sheltered and tax advantaged investments because the tax adjusted expected return on them will be much better than taxable investments (which create more wealth and jobs). So, my income won't change too dramatically. The luxuries I will give up are truly things everyone can live without and I won't miss so much because I will have A LOT more leisure time (private planes are much more of an issue when the only time you take "vacation" are the odd weekends and you don't have time to deal with the hassle of public airports).

You, however, will be unlikely to find a job because people like me won't be creating them and you will not find any incentive to work and risk that much either. If you do, then you are a fool and I leave you to it. If things get too tough, I can always acquire citizenship in another country because almost every single country on earth hands out citizenship to those who meet a wealth test and I'll resume my business there. You will be stuck here reaping the results of your attempt to steal from the most productive in your country.

Every country which has tried to punish the most productive has suffered a fall in economic activity and a brain drain. The most notable is the Soviet Union. But, I'm sure you've got four million differences between the Soviet Union and the United States. What's important is not the differences but the similarities that caused the Soviet Union to be the workers paradise that it was before it collapsed. Good luck to you.

Early Retirees writes:

Dave mentions a good point. I suspect that higher taxes especially affect decisions of the most experienced of our workers, because we have accumulated enough assets to opt for early retirement or less time consuming (and less productive) jobs. We will see industries with executive pay limits lose much of their most experienced talent (and some of their idiots too). High taxes and compensation limits make those jobs that require a 60-80+ hour/week commitment much less worth the major life sacrifices.

Erin writes:

First of all let me say I'm not an economist, I'm a business owner. I'm what you might call an "average American." My husband and I have been married a couple of years (no kids yet) and we own 2 small businesses in a medium sized city. The only benefit we currently have from "owning our businesses" is WE get to choose the 70 hours a week we work.

My point is that the situation described definitely doesn't decrease our incentive to work hard and make more money, but it DOES make us mad, make us resent welfare programs even more and it does increase our incentive to work harder at keeping that money away from the government! (I'm talking in perfectly legal ways with the help of a smart accountant. The tax system is complicated enough so we, and thousands of others, pay good money to try our hardest at keeping more of what we work so hard for.)

I think the main thing for me and a lot of others I talk to is it just boils down to feeling like hundreds of little roadblocks are put in your way on the road to whatever you define as your personal success... and it's a constant struggle to get around them. This two point raise might not seem like big deal to some of you, but when added to everything else, these small roadblocks are eventually going to make a wall.

If the tax policies continue this way, a wall seems inevitable and it IS disheartening to look towards the future...

While some say the thing to do is stay positive and learn about the tax policies of the people you vote for, you can't ignore the evidence either. The day the Stimulus Bill and it's tax changes were signed into law was a sad day for the American economy... and the American Dream.

PayGoVince writes:

To DF,

If you have a high income and you are not productive commensurate with your income you will not have that high income very long.

Congress has proven, once again, to be incapable of learning from previous mistakes and following President Obama’s rhetoric of “change we can believe in”. Instead, they have resorted to loading the bill with pork and special interest favors while largely ignoring the President’s requests for investments in infrastructure.

http://www.beyondthemargin.net/

El Presidente writes:

Erin,

This two point raise might not seem like big deal to some of you, but when added to everything else, these small roadblocks are eventually going to make a wall.

How does reducing somebody else's taxes change your circumstance? I understand feeling like it isn't fair, feeling like somebody has it easier than you did, etc., but if your income will not decline (and might actually go up from increased consumer spending) and your taxes will not increase, your disposable income will not be reduced. The return on your labor and investment is exactly what it was before, or more; it just isn't as much more than others as it was before. So, what do you care?

This is the problem with our cultural understanding of fairness, and wealth. We think that wealth equals advantage. Thus, we are not wealthy until and unless our property allows us to have an advantage over others. This means that we are only wealthy relative to other people. If this is true, then we may as well bring back slavery, since depressing the wealth of another elevates your own in proportion to theirs. If slaves own nothing, you will be phenomenally more wealthy than they are. However, as Thomas Sowell points out, slavery is inefficient because it produces less output. So, you would be quite a bit less wealthy than you are now, in terms of your material standard of living. He's about as far to the right of the political and economic philosophy spectrum as we could get. I'm frequently on the left, but I hope you will accept such a judgement from him, if not from me.

If we are going to define wealth in relative terms, then we have an obligation of intellectual integrity to define poverty in relative terms as well. However, officially, we don't. Poverty, as defined by the United States government which administers the programs you want to avoid paying for, is a multiple of food expense and has been for quite some time. That means that our agriculture subsidies and cheaper foreign-grown agriculture products hold down the cost of food and the official poverty threshold so that your increase in property will allow you to command the labor of others at a cheaper price than you otherwise would. While your boat might rise with the tide, some are fastened to the dock by a number of policies which favor you over them. They take on water and sink when they can't keep up with a rising tide. If you would not embrace and support them, I can find no good reason why the rest of us ought to consider doing it for you. It's a bitter pill, but fairness, if that's what we're seeking, must be rooted in integrity. Our refusal to accept this basic dynamic is a huge part of how we got to this point. If we can't understand that, we may have to wander around in the wilderness until we learn it.

El Presidente writes:

PayGoVince,

If you have a high income and you are not productive commensurate with your income you will not have that high income very long.

Prove it.

needle writes:

el presidente, do you really think that a tax cut for some will not be offset elsewhere? obama made no secret of his intentions to raise taxes on the "wealthy" to finance his agenda.maybe in some classroom discussion the lowering of taxes effects no one but the recipient of that lower tax rate but in the real world somebody will makeup the difference.our government is to be likened to a rapacious beast,not only unwilling to get by on less but never satified with its present take.

Les writes:

Several comments start out with: "I'm not an economist.." or some similar disclaimer. In that case why post a comment if you are simply out of your depth and unable to contribute to moving the discussion forward?

I'm not trying to be offensive or critical, I'm just puzzled. What am I missing?

El Presidente writes:

needle,

[D]o you really think that a tax cut for some will not be offset elsewhere?

In the short run, these are deficit-financed. In the long run, the burden of repayment can be distributed however we see fit. It could be through increased taxes, reduced spending, or increased efficiency. If you buy the "rising tide" argument, then the debt will represent a smaller share of future output and national income than present output and national income. If you don't, welcome to the real world.

Here's a good idea: next time we have surpluses, let's not piss them away with capital gains tax cuts and a $3-trillion unnecessary war. Instead, let's use them to pay off debt and shore up entitlements. Government revenues and the economy will rebound. When that happens, will the political right have the courage to stick with truly countercyclical policy?

Erin writes:

El Presidente writes:

We think that wealth equals advantage. Thus, we are not wealthy until and unless our property allows us to have an advantage over others. This means that we are only wealthy relative to other people. If this is true, then we may as well bring back slavery...

First of all, El P., the idea "we may as well bring back slavery..." even to make a point, is outlandish, rude and insensitive. I grew up in the South, where that's still a sore subject so be careful with your cavalier comments.

Secondly, I don't prescribe to the notion that wealth allows (or entitles) me to "an advantage over others." And P.S. I'm not wealthy - yet - I still have high hopes. A portion of my youth was growing up in what you would call poverty, a single child of a single mom, using food stamps and living in a trailer in the back of a family members yard (we couldn't afford the trailer park). So I understand poverty just fine thank you and I wish to have NO ADVANTAGES over any one still in poverty.

The wall I spoke of is a wall made up of political policies that influence our tax structure today. If the same ideology is used in the future, it's not just a wall for ME but a wall for ANYONE wishing to climb higher: poverty level to lower middle class, as my mom did (I'm proud of her by the way) or even lower to upper middle class and beyond if they wish.

Your comments seem to reflect the idea that you expect all "the poor people" to want to stay poor! That's as far from the truth as you can get. Most people want to move up in the "social structure," not for power but so they can feed their kids without having to forgo the electrical bill this month.

My opinion is simply that stopping, hindering or even just discouraging the upward movement of one section of the economic picture affects everybody and therefore negatively affects the whole economy... including those left in "poverty."

Les: your comment is elitist.

El Presidente writes:

Erin,

First of all, El P., the idea "we may as well bring back slavery..." even to make a point, is outlandish, rude and insensitive. I grew up in the South, where that's still a sore subject so be careful with your cavalier comments.

It might be taken that way, but it was certainly not intended as such. Slavery itself is outlandish, rude, and insesitive. It is our tendency to move back toward such a horrendous thing that troubles me, even if we protest that we wouldn't actually go that far.

Secondly, I don't subscribe to the notion that wealth allows (or entitles) me to "an advantage over others."

Then why are you pursuing wealth? What value will it have for you?

It is nothing more than misdirection to tell you that your taxes are increasing by 2% because somebody else's are being decreased. It is admirable that you work hard and that you aspire to succeed in your personal pursuits. I am not disparaging that at all. I simply don't understand how this tax change gives you cause for resentment. Can you explain?

Tom not phased out writes:

Talking about an increase in marginal tax rates due to phase out, (not a tax increase), while ignoring the decrease in marginal tax rate due to FICA phaseout isn't reasoned analysis, its whining.

The guy and his wife who make 400000 are probably not very productive. Productivity is output/cost, and it is hard to get that to be very high when cost is high. Volunteers have very high productivity, as do most low wage workers.

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