George Will's questions for John Kerry

Nonsense..... You eliminate the income tax, Social Security tax, Medicaid tax, and you take home 100% of your salary, ..... Prices for all products drop immedialely by more than 20%..... you charge a 23% sales tax on "New" items only, and you send a check to every working american monthly for an amount equal to the sales tax that wage earner would pay in sales tax on the "necessities" of life...... The bill is in congress now..... America would have the lowest priced products on the planet and every business in the world would be trying to come to a "Tax Free" America to produce their products.... Pat Landy

Reply to
patlandy
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I agree what that sentiment. "Luxury" taxes are a pet peeve of mine - if I want to skimp on groceries in order to pay for my (hypothetical) Ferrari, that's no one's business but mine.

Ok, I don't understand. Your previous posts seem to indicate that you're in favor of a progressive income tax - isn't taxing people at different rates a form of social engineering?

I'm way out of my depth when it comes to restructuring our tax system, but if life has taught me anything, it's that knowledge of the subject matter is not a prerequisite for participation in a discussion of taxation.

R, Tom Q.

Reply to
Tom Quackenbush

Ed, that's what taxes are all *about*. Social engineering.

Or why else would the single biggest benefit to individuals (the deduction for home mortgage interest) exist at all?

The social engineering is, they think folks should own houses.

Jim

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Reply to
jim rozen

unemployment at

That's real interesting, Pat.

Ed Huntress

Reply to
Ed Huntress

Sorry, I should have clarified what I mean. I am in favor of a progressive income tax, but the fundamental reason I'm in favor of it is that it's good economic policy. People immediately bring up the issue of "fairness" when you talk about it, so the discussion tends to get shifted to different ideas of what "fairness" is. But, again, that isn't why I'm in favor of it -- although substantial *unfairness* would make me uncomfortable with any policy.

To me, social engineering (through taxation, in this case) means the government encouraging or discouraging individual behavior by "rewarding" or "punishing." I despise the idea, partly because it makes the whims of government a basis for deciding what is right and wrong: an official "morality."

A progressive tax policy has a legitimate economic basis, disregarding the other moral questions. It leads to a stronger economy. By taxing more heavily large accumulations of disposable income, you keep consumption in balance with investment. If your economy is short on capital investment (which ours sure as hell is not; we have enough to send it around the world, and people around the world are sending even more of it here), then you want to flatten the tax structure. If your economy is short on consumption (we aren't short on that, either), you make the tax structure more progressive.

That's just good economics, not social engineering, in the sense that the term means, to me, trying to influence peoples' behavior. It's neutral regarding behavior although it does assume that people want more money, and it assumes that progressive taxation isn't going to keep the rich from expending their efforts to get more.

I'll buy that.

Reply to
Ed Huntress

You may want to look at the distinction I just wrote about in a message to Tom Q. Of course it isn't as clear-cut as my simplified explanation. But the encouragement(s) to buy houses have a big economic justification in addition to any issues of personal virtue or general behavior modification that may be involved.

"Social engineering" to me implies engineering the way people behave: encouragements to behave "virtuously," like incentives to save, even at times when more saving is the last thing an economy needs. That's a big part of Japan's problem right now, for example. They've moralized their economy into utter stagnation. Their slow escape from the liquidity trap is occurring because people are shedding their traditional idea of economic "virtue."

Tax policies that strengthen the economy are something else. They don't even have to consider "engineering" peoples' behavior, in many cases. Making it possible for people to buy houses adds enormously to the country's wealth, to our economic stability, and to the pool of private assets from which we can draw as individuals, satisfying many needs that otherwise would require cumbersome structures such as Social Security. A key assumption is that they already want to buy houses, if they can.

Of course, if you want to stretch a point, you can turn these things around and say they're all incentives to encourage particular behavior. But that would miss the important distinction. Social engineering engineers society, usually for some philosophical objective. That's what Tom DeLay wants to do. He wants to make our society conform to the Bible, and he's said that expressly.

Good economic policy, on the other hand, begins with the idea that improving peoples' lives by improving the economic environment is the first objective. I believe it's an important distinction, and it explains a lot about the economic policies under Clinton, for example, versus those under George II.

Ed Huntress

Reply to
Ed Huntress

Ok, buying houses is good for the economy, and it's good for individuals as a way of saving. But for the government to give a big tax break means they want folks to behave that certain way. I would tend to call that a kind of social engineering.

The idea that old folks should be taken care of is at the root of social security. That program is indeed social enginnering because there is that philosophical viewpoint behind it. "Look after old folks."

He must like school vouchers then!

I think I see the distinction there.

Jim

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Reply to
jim rozen

Folks wanted to "behave that way" before there were any tax breaks for it. The tax breaks made possible what they already wanted to do. You can argue this one if you want, but, to me, that's simply an economic policy that enables an already desired behavior, and it's one that also happens to be good for the economy. There wasn't any system of rewards or punishments necessary to accomplish it.

I'd distinguish that from something that encourages, for example, long-term investments in preference to short-term ones, such as the tax break on long-term capital gains. I believe most investors would like to see short- and long-term investments taxed equally, so they weren't coerced into holding stocks longer than they otherwise might want to. The lower tax on long-term capital gains is social (or economic) engineering, to me. It coerces a particular behavior.

Yeah, Social Security definitely is a case of social engineering.

I suspect he would, since he can't force our public schools to require fours years of evangelical Christianity for graduation. He'll just "enable" it another way. And he would have a good point in doing so, as long as he's honest about what it is he's doing.

Ed Huntress

Reply to
Ed Huntress

Ed Go to this site and read the brief explaination of the Tax Bill "HR25" that is being proposed in Congress, this bill would create full employment and would do away with all current Federal Taxes, Income, Social Secutrity, Mecicaid and follow the link "read more" at the end to see the Bills effect on all current businesses...... Let me know what your opinion is, I find the logic of this Tax Plan to be very sound!

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Landy

Reply to
patlandy

Pat, excuse me for being short about this, but I don't want to argue about consumption taxes.

Here's why: These are very old ideas that have been discredited over and over again. I first encountered these proposals in policy science classes around 1967. They are old hat.

You'll notice that the "Fair Tax" folks base their idea on some research by Dr. Dale Jorgenson of Harvard. It is a gross misrepresentation of Jorgenson's work. In fact, here's what Jorgenson said about consumption taxes just two years ago:

"The Achilles heel of proposals to shift the tax base from income to consumption, at least so far, is the redistribution of tax burdens. Recipients of business income, including holders of corporate bonds and shares, are generally much more affluent than recipients of income from work. Excluding this business income, or property-type income, from the tax base would shift the burden of taxation from the rich to the poor." -- Dale Jorgenson, "A smarter type of tax"

Jorgenson's ideas about "efficient tax" are much more complex in theory than they appear in their simplistic, reductionist incarnations, such as the one you're discussing here. And they are highly controversial. I've read some of it, and it seems to me to be all abstract, based on some bizarre ideas about how people actually behave. He's old-school, the kind of economist who assumes perfectly rational behavior in his models, and his "rationality" requires that one have a PhD. in economics to understand what is "rational." If you read what's going on in the field today, you'll see that economists are trying to clean up this part of their act, figuring out how people

*really* behave. The old models of rational behavior may all wind up in the dumpster when they get good at it. I suspect they will.

The whole "hidden tax" thing is conceptual, not actual. The actual taxes on GDP are easy to measure. They are nothing like the so-called "hidden" taxes.

One last thing: If you looked closely at the figures you posted in your last message, you'll see that you somehow "discovered" a potential addition of

20%, or roughly $2.2 trillion dollars, to our GDP that would come through implementing these ideas. That's $2.2T more income with no reductions in total taxes, no new production, and no new consumption. That isn't economics. That's voodoo. And that's why I won't get into this argument.

Good luck. It's fun to think about, at least.

Ed Huntress

Reply to
Ed Huntress

Right, so "progressive" taxes are inherently evil.

Gary

Reply to
Gary Coffman

Actually, the politicians like the campaign contributions of the home building, home loan, and real estate lobbys.

The net effect of the home mortgage deduction is to encourage people to pay more for homes than they otherwise would. This increases the bottom lines of developers, the home loan industry, and realtors by artificially inflating the market price of homes.

Gary.

Reply to
Gary Coffman

Nope. Nobody gets penalized. Progressive taxes don't keep people from making more money, do they?

Ed Huntress

Reply to
Ed Huntress

It is fair because *my* capital gains will be taxed at the same rate as those of the likes of Bill Gates. Actually, since my capital gains are mostly in the form of 401k investments and home value appreciation, which are already treated specially under the tax code, right now I'm defacto being treated better than the likes of Bill Gates. Now I don't cry for Bill, but basic fairness says he shouldn't be penalized for being more successful than I have been.

Gary

Reply to
Gary Coffman

Yes, it does. It also increases the number of homes sold, and it vastly increases the value of privately held assets, particularly by the middle class.

All of which is a net benefit to the economy, which avoids the need for government subsidies and "welfare" programs that otherwise would be needed to stimulate a comparable amount of both consumption and savings.

Ed Huntress

Reply to
Ed Huntress

He's not. He has $45 billion, and you don't.

Ed Huntress

Reply to
Ed Huntress

Now who is misrepresenting things? Germany, and most of the rest of Europe, levies a sales tax *ON TOP OF* all the other taxes, like income taxes, they levy. The proposal Pat is talking about *replaces* all those other taxes with a sales tax. That's a very different situation.

At least one state, Florida, uses a sales tax instead of a state income tax. I don't see the Florida economy being hurt as a result.

Gary

Reply to
Gary Coffman

Taken to an extreme, this is called a balloon. One Im expecting to see pop in the not too distant future, which will spell doom for many other industries besides overpriced housing.

Gunner

"To be civilized is to restrain the ability to commit mayhem. To be incapable of committing mayhem is not the mark of the civilized, merely the domesticated." - Trefor Thomas

Reply to
Gunner

Not really. Whether it's "on top of," or stand-alone, it's a tax that depresses consumption.

This isn't my idea, BTW. It's the well-documented understanding of maybe 90% of the world's top business economists, policy makers, and other people who study such things for a living.

There are several other states, and one (MI), that actually has a VAT. The results are mixed. And they all are dominated by federal taxes, so the results are extremely difficult to pick out from the noise.

Michigan is shit-canning its VAT, by the way. It's a loser.

Ed Huntress

Reply to
Ed Huntress

Just keep in mind that a fixed-rate subsidy or a discount, like mortgage interest deductions, don't have any significant influence on such bubbles. They're sheer speculation, like the stock bubble of the '90s.

Ed Huntress

Reply to
Ed Huntress

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