Howard Dean and the allocation of the tax burden.

[AP]

I was in the middle of typing this post when the epic thread to which I was going to add it got locked. I know this is a retread of an extensively discussed issue. However, I thought that I might have hit upon a more eloquent way of making my point. I know where this is headed. Nonetheless...


Dean has said that the middle class will be asked to pull their weight just like the supper rich. He has conflated middle class economic interests with the wealthy (which is a problem in and of itself). He has said, essentially, don't expect a lowering of the middle class tax burden until my sixth year.

Other candidates are talking about allocating the burden in a way that creates better economic incentives for Americans and, therefore, will help grow the economy.

Edwards doesn't talk about soaking the rich. He talks about shifting the allocation of the tax burden OFF people who work for a living (earned income earners) and on to less socially and economically productive forms of wealth (unearned income earners).

This is, essentially, Keynesian economics -- let the middle class accumulate more wealth, and they will grow the economy with that wealth, in addition to being able to have more opportunities and options for themselves, which creates more happiness.

Dean won't give the middle class that profit margin which comes from lowering the tax burden (which has shifted dramatically to the middle class over the past 30 years -- and going back to the 2000 rates and brackets is going to do almost nothing to change the fact that the middle class carry all the weight). Instead, he says he will give them a couple social programs.

It's a false dichotomy that Dean is offering America. You can have good social programs AND a sensible allocation of the tax burden. In fact, with a sensible allocation, you'll have a more productive society which will then have even more money with which to do good things.

[PassingFair]

1. Here you go again...

"He has said...don't expect a lowering of the middle class tax burden until my sixth year"

LINK, please.

In debate, he said he would balance the budget in his 6th or 7th year...

And by the way, if he can cover my kid's health insurance and prescriptions (and he will) then I am not interested in lowering my tax "burden".

[AP]

2. He said that until the budget is balanced, ballancing the budget takes

priority over middle class tax breaks. He said that he would balance the budget no ealrier than sixth year.

[Hep]

4. NEVER a quote

Claiming that a candidate said something he didn't actually say is a violation of basic tenets of civility. You must recognize a difference between drawing conclusions about a person's policy or comments and a direct quote.

[AP]

7. Dean DIDN'T say that balancing the budget takes priortity over tax cuts...

...for the middle class?

I must have really misread him.

[Hep]

12. Use quotes

If he said something and you're so sure about it, QUOTE HIM.

Thanks

[maddezmom]

8. from the Black and Brown Debate

DEAN: There was no middle-class tax cut in this country.

ARRARAS: So let me interrupt you one second. Would you wait then until you balance your budget to then go ahead with the middle- class tax cuts?

DEAN: That's right, the first priority is balancing the budget. And what we will do is lay out a plan to balance the budget and include some sort of plan to increase corporate taxes, just as Joe Lieberman has suggested, because corporate taxes are now at the lowest level since 1934, which means the rest of us are paying the rest of the tax burden and that's not fair.

more:http://www.washingtonpost.com/wp-dyn/articles/A8591-2004Jan11_2.html

[Hep]

13. Balancing the budget and giving middle class tax relief can be

part of the same budget, right? That he gives priority to balancing the budget does not mean that he won't offer any tax relief at the same time.

[AP]

17. Well, you think he wouldn't keep telling us his tax plan is weeks away

if he were going to do that. Why won't he say it?

What he has said is no middle class tax cuts until budget is balanced.

[Hep]

21. I'd rather he take his time and put out a good policy

than appease his critics by rushing some half assed policy out.

It's not all about quieting the critics. There's something bigger going on here.

[AP]

28. Taxes are a huge issue. The other candidates don't have a problem letting

the voters know where they stand on taxes.

[Mairead]

24. Where are your quotes?

You demand quotes but then offer only speculation?

[Hep]

25. Why are you asking for quotes?

I never claimed Dean said anything, nor did I claim to be paraphrasing for Dean.

Do you agree or disagree with what I posted?

[Mairead]

42. Because you're making claims -- speculative claims

"Balancing the budget and giving middle class tax relief can be part of the same budget, right? That he gives priority to balancing the budget does not mean that he won't offer any tax relief at the same time."

Are you saying these were only empty words on your part, sort of like the output of a noise generator?

[AP]

46. Good point.

Hep, you got any evidence that Dean is going to offer tax relief to people who work for a living?

[rogerashton]

3. Who do you think is the middle class?

Much to my surprise, I find myself in about the top 5% of salary earners. Am I middle class?

In this country, everybody is middle class, so "middle class tax cuts" could be for anybody.

We need to talk about tax reform with these ground rules:

1) Government has to have sufficient revenue to avoid inflation and be sustainable. (Sustainability is the current problem).

2) Within those guidelines, some taxes are worse than others. Taxes that fall on the employment relationship -- whether nominally paid by employer or employee -- are among the worst and need to be reduced (which means others will be increased based on 1).

3) Other things equal, broader based taxes are better than more narrowly based ones. In particular, that means Federal taxes are less bad than state and local ones.

4) Green taxes are among the least bad, and may actually do some good, so they are prime candidates to increase. Although businesses will scream (and so will California SUV owners) evidence indicates that these taxes are always less costly than anticipated when people adapt to them.

5) Although it is often said that taxes on profits, corporate surpluses or capital gains handicap growth, the evidence to support this claim is missing. To a considerable extent these taxes may be passed on to consumers or "eaten" by the fortunes of the wealthy and the retirement funds of the (upper) middle class. We just don't know. Ignorance may be a reason for reducing these taxes, but not if that means rendering government finance unsustainable or raising other taxes we know are worse.

6) A progressive tax system is desirable for two reasons. First, poor people are deprived of dollars that would be spent to meet basic needs, which consequently remain unmet, a bad thing in itself. Second, heavy taxation at the upper end may reduce the tendency of the very wealthy to accumulate power and undermine our democracy.

7) Despite all of that we need a simple tax system.

8) Things are not as bad as they may seem. The increase in productivity in recent years is making us potentially richer at a remarkable rate, so, if the potentiality were to be realized (meaning a growth rate of GDP of 5% or more) we could soon be back in the extraordinary situation of the late 1990's, with the prospect of both government surpluses and tax cuts. But anyone who promises that for the presidential term 2005-2008 is either a lier or a fool.

Nothing here that makes good slogans, I'm afraid.

[AP]

5. In America today, if you're living on your salary and debt, you're probabl

middle class.

[PassingFair]

6. Uh, yeah...

yeah, what he said....
Thanks!

[DjTj]

45. "Tax wealth not work."

That's your slogan.

[bearfartinthewoods]

59. hey...i LIKE that

[Larkspur]

9. Considering that most did NOT want Bush's tax cuts

Dean was on stable ground. Most people agree that Bush's economic policies are a disaster. Dean has done a good job explaining the pros and cons of repealing Bush's tax cuts and when given valid reasons, most people will accept a few more bucks out of their pay to pay back the deficit and ensure social programs like Social Security, education, environment protection, etc.

It's how the debate is framed and Dean's rivals are framing the tax cut really as a tax bribe to a small percentage of the taxpaying population. Us singles and child-free didn't get much of a tax cut and our property taxes are going up thanks to Bush.

[AP]

10. Not a question of want, but of need. And American needs a more sensible

allocation of the tax burden for the sake of the economy. We need to shift it off the middle class income earners and on to less productive forms of incomes and less economically productive earners, like people who live off their investments and people who inherit a lot of money and who are given a lot of money.

[PassingFair]

11. Did you read what has come before?

Dean will RESCIND the recent tax cuts, including the obnoxious repeal of the estate tax. American's who swallowed this cut as good for the country are beyond my comprehension (or multimillionaires). He will reinstate the taxes on dividends.
I will not mind paying taxes at the '99 rates if it means getting health care for America.
He advocates taxing corporations at a higher rate! How horrible.
He advocates penalizing corporations who move jobs to, or pollute
and exploit other countries. Hang him High!

[AP]

14. He wants to go back to 2000. 2000 was pretty good for rich people.

He's not saying he wants to go forward to an allocation of the burden which makes sense for today's economy.

If you told super-rich Republicans that in 2005 they were going to have the same exact tax code they had in 2000, with the same rates and brackets, but they were going be 30-40% wealthier, and everyone else was going to be poorer and in deeper debt, and their jobs would pay lower wages and be less secure, you know what they'd say?

They'd say, "sweet." And you'd be able to knock them over with a feather when you told them that it was a Democrat who was promising to do that for them.

[Hep]

16. Not as good as 2003.

n/t

[AP]

19. still great, if you're rich. And I doubt they thought they'd get away with

it forever. And, like I said, they'll love bush for reaching so high that a democrat ended up giving them somthing that still kept them ahead and sold it as hurting the rich.

[Hep]

22. A start is a start.

n/t

[AP]

27. That's what the rich want you to think. They want you to forget all their

HUGE gains from 73-2000. They want you to look at Bush's overreaching as the only thing that's happened in 30 years so that you say, 'give that back.' You go back to 2000, which constitutes an even less fair tax structure when superimposed on the 2005 economy (things have changed a LOT in that time, thanks, partly to the huge tax breaks Bush gave the rich).

So, the rich got a totally free ride for 3 or 4 years and then they get to laugh amongst themselves that, thanks to a Democrat, they get to continue on their 32-year trajectory of soaking the middle class, with most Americans thinking that they're actually getting a break.

[Hep]

29. So who will promise to take us back to 1973?

And how on earth is that a reasonable expectation?

[AP]

30. You mean, who'll get us off this 30 year trajectory of helping rich?

Edwards, Kucinich, Kerry and Clark (and Lieberman) seem to be the ones who take this issue serioulsy.

Edwards is the one who seems to most fully integrate the issues involved in the tax debate into his personal as a candidate.

[Hep]

31. No, I mean who will take us back to 1973?

Going back to 2000 would be taking us off this trajectory. Just not to the degree that you want. And Dean has never said he wants to take us back to 2000 and STAY there. That's just his first step.

[AP]

32. Gotta move forward, Hep. Dean and those who want to take us backward

need to start thinking about tomorrow. Going backwards only helps those who are on top.

[Hep]

33. Sad

You KNOW that Bush's two rounds of tax cuts hurt our country significantly. You KNOW that repealing that is a step in the right direction. But you appear to hold Dean to a different standard.

Repealing Bush's tax cuts IS moving forward. A small step, but a step, and an admitted first step.

[AP]

34. All the candidates want to repeal them. Dean and Gep are the ones who...

.... don't care about the allocation of the tax burden. Dean ACTIVELY supports moving backwards.

Caring about the allocation of the tax burden -- getting off this 30 year trajectory of increasinly burdening the middle class and lightening the load for the people/corps at the top -- is caring about the future.

[Hep]

35. If he actively supports moving backwards then it's your job

to give a detailed explanation of HOW he's doing that.

[AP]

37. He wants to move back to 2000 rates and brackets and code.

You know about bracket creep, right? What was upper middle class wealth 10 years ago becomes middle class wealth today.

In the Bush years, the rich have been getting richer. They're doing better every year. Meanwhile, middle income people see their benefits slashed, their salaries not increasing much, and get deeper and deeper in debt. I read that 10% more Americans are experiencing hunger (as measured by a set of statistics). So we have this polarizing economic situation.

One more thing to get straight: the lesson of the de facto flat tax on corporate income. You can say you have a progressive tax code, but if you're progressive brackets are 1% on income of 0-1 dollars, 5% on income of 1 to 5 dollars, and 15% on income of 5-1 million dollars, and almost everyone is in the top bracket, then you have a de facto flat tax. We have a de facto flat tax on corp income. That's one of the big achievements of the the right in the last 30 years. (Dean's argument to go back to the 2000 code seems like a back door way to introduce the de facto flat tax on individual income earners too.)

And a flat-taxed bracket is a boon for people at the top end and a burden for people on the bottom end.

OK, so we have the theory down?

Now, to Dean. If we go back to 2000 rates and brackets, the people in the top bracket will be much wealthier than they were in 2000. I've seen a stat that said the top 500 income earners increased their wealth by a somthing outrageous last year, and the top 1% by 10% over the last three years -- that's a 31.1% increase over three years. So you're asking these people to pay within a structure that has them wealthier than they were before, and you have people creeping into their bracket at the bottom end, while the people at the top are moving farther out. On top of that, we're talking about a 2000 code which was a gift to peopel who earned most of their income from cap gains. (Dean will take back the dividend inc tax break, but has he said anything about the late 90s cap gains break which fueled some of the more outrageous tax avoidance during the late 90s?).

So, do you get it? Going back to 2000 is a gift to people at the top who have moved farther out (and who will still have the gifts the Republican congress gave them in the late 90s which shifted the tax burden from unearned income to earned income).

What we need is a tax code which which makes sense for today's and tomorrow's economy, not 2002's or 2000's. Dean has stated repeatedly that he's not so concerned with this issue.

[Hep]

15. Great point!

Many Americans don't realize that repealing Bush's tax cuts is a great first step to shifting the burden.

[AP]

18. Burden started shifting in '73. Going back to 2000 is still 27 years off.

Believe me, if you're super-rich, you're going love 2000 rates and brackets in a 2005 economy.

And Republicans are going to think that Bush was a genius for reaching so high for them that going backwards still constitutes and overa-all gain.

[Hep]

26. Believe me, if I'm rich

I'm not living in America.

Let republicans think what they want. I'm not concerned with them.

[PassingFair]

36. What the heck!

Let's go back to '93....1793 France, OK? That suit you? You can call your plan Marat-Economics 101.

OFF WITH THEIR HEADS...
With beligerent Repukes demanding that the rich (the INVESTING CLASS!!!!) pay no taxes at all, I'm ecstatic with Deans plans to repeal...

[cryofan]

20. progressive taxation is the most important issue of this election

How do we raise the tax burden on the wealthy back to the levels we had 25 years ago? Back in those days the wealthy and the upper income bracket paid 70% or more. And no one was talking about Social Security going bankrupt, and public college was a pittance, and hospital beds were easily found, and medical care was relatively cheap.

If you want to build a real liberal govt, you have to have progressive taxation.

Now, on to our former frat boy Howard Dean III, formerly of Park Avenue and the East Hamptons....I actually agree with Dean not wanting to give back the tax cut. But of course I also like Edward's proposal on unearned income. The real problem is that neither one really goes anywhere near far enough. We are STILL not talking about going back to real progressive taxation. And of course the working poor are taxed entirely too much. A self-employed small business person has to pay 15% social security right off the top....and them comes the income taxes. When are we going to make the rich and upper income earners shoulder their fair share of taxation? Meaning 50-70% rates for them....

And what candidate is most likely to do so? Kucinich is the only one I think would do it.

THe real problem is that no one is really even talking about real progressive taxation......Why not? Well, maybe because the media keeps distracting with bogus, relatively minor issue and certainly divisive minor issues like gun control, abortion, gay marriage, affirmative action, etc etc etc....and everyone seems to fall for it....

[AP]

23. If you believe that the allocation of the tax burden is a huge drag on the

economy, then, even though Edwards, Kerry, Clark and Kucinich's plans don't close the gap in the first year, you have to believe that they're going to make the economy grow, and thus create greater tax revenue down the road.

[cryofan]

51. trickle down does not work all that well --eom

[AP]

52. It doesn't work at all. That's the poitn of Keynes. You don't give

everything to the rich and expect the middle to grow, and expect a functioning, competitive economy.

You do what you need to do to help the greatest number of people achieve the greatest opportunity to reap the rewards of their labor. Inevitiably, flowing economic, cultural and political power down and out means a growing the middle class.

[AP]

38. Could a Dean supporter answer this question:

When Dean says he wants to go back to 2000, does he mean the exact same brackets we had in 2000?

There is an infaltion guaged-index which means the brackets all move slightly each year. I'm not precisely sure how it's down. They may take an overall number and apply that percentage to each bracket. In any event, does Dean want to go back to the 2000 code, but maintain the infation-indexed adjustments for years 2001-2004? Or does he want to ignore those adjustments and transpose the 2000 code in its entirety, without the indexed bracket adjustments on to the 2005 economy?

Anyone know?

[PassingFair]

47. You read too much into it.

When Dean says he wants to go back to 2000, he OBVIOUSLY means pre Bush/Neocon policies. The statement is certainly not an attempt to explicitly spell out his entire economic plan. Jeez....

[AP]

49. I'm pretty sure he said he wants to go back to the 2000 code because

he said it worked.

And my quesiton is important becuase it get's to the heart about how Dean imagines taxes. Doesn't he care that some Americans are getting much wealthier year over year? Doesn't he want a tax code that makes sense for today's economy?

[AP]

50. kick. Anyone know the answer?

Or am I asking a rhetorical question which doesn't really have an answer?

[w4rma]

39. Dean may cut the payroll tax and remove the payroll tax cap. (n/t)

[AP]

41. Operative word: "may." Where's the plan?

[Mairead]

54. Even an actual unequivocal commitment would be miles better

than a handwaved 'may'.

[AP]

58. It's amazing that, about 30 hours before the first vote, Dean doesn't have

a tax plan and people are using the word "may" to explain rumours about what they think he'll do.

It's ONLY the most important issue of 2004, if you ask me.

[cryofan]

44. dean may raise SS retirement age, cut SS, Medicare & vets benefits, too

here is the evidence of Dean's possible actions as president, in his own words:

>>>>>>>>>>>>>>>>>>

Most of the Democrats in the legislature rebelled against Dean over the budget cuts, and he ended up depending on Republican votes to pass most of his proposals. At the time, a local Vermont newspaper wrote, "The biggest items on Dean’s agenda for next year are likely to provoke more opposition from the Democrats than the Republicans. Nevertheless, Dean said he feels no particular pressure to deliver the goods to his party or to promote the Democratic agenda."15

In the mid-1990s, Dean even aligned himself with the likes of Republican Newt Gingrich on his stance on cutting Medicare. He opined at the time, "The way to balance the budget is for Congress to cut Social Security, move the retirement age to 70, cut defense, Medicare and veterans pensions, while the states cut everything else."16
....
The Rutland Herald described how one protestor, Henrietta Jordan of the Vermont Center for Independent Living, "said it would be much fairer to raise taxes on people with expensive homes and cars, children in private school and a housekeeper at home than to cut programs that helped the 66,000 Vermonters living with disabilities."17 Dean responded callously, brushing off the pleas of Vermont’s most vulnerable by saying, "This seems like sort of the last gasp of the left here."18"
>>>>>>>>>>>>>>>


The rest of this article is here:
http://www.isreview.org/issues/32/dean.shtml

[KittyWampus]

40. Edwards Can Talk Re: Reallocating Tax Burdens But Without Cutting Defense

There will be no significant progress.

Shifting the tax burden will NOT provide the funds needed to retool our Economy towards Green Technology.

Edwards hasn't ever proposed cutting Defense spending and he would not be able to.

Our entire Society and Economy needs to be shifted and Edwards doesn't have the credentials.

And frankly, he sounds like one of the most Conservative Democrats running regarding Foreign Policy and would consequetnltly have no intentenion of cutting Defense.

Having Shelton as an Advisor simply enforces this impression

[AP]

43. Not sure I agree with you there (Edwards voted against 87 bil Iraq alloc.)

The truth is there is huge untapped potential in the US for wealth creation.

But America is run like the Matrix. The working and middle class (the income earners) have tubes plugged into their wallets in the form of legislated profits for huge corproations, and taxes which fall very heavily on eanrned income. We're all in this somnulent state where we do little more than create wealth for the super-wealthy. It's not a system which maximizes wealth. If we unplugged the tubes and got out of the pods, we could be much more productive -- but the rich would be less certain of where their next fat check was coming from.

It'll be amazing how much social wealth there will be to do great things once we convert from the Matrix to an economy where we're all WORKING TOGETHER to get ahead -- where work is rewarded, and therefore encoruaged.

And you know what the problem with the defense budget is? Well, we should be spending MORE money on soldier salaries, and training, and building up a military that is self-sufficient and contained. And we should be spending LESS money on sub-contractors. The military is an expensive waste of money because it is being used to transfer taxpayer money to private companies, and Edwards IS down with stopping that. That's why he voted against the 87 bil Iraq apportionment (which Dean said he supported so long as the buget were balanced -- ie, one interpretaion is that he'll give away taxpayer wealth to private companies so long as there's taxpayer wealth to give away).

[Name removed]

48. Deleted message

Message removed by moderator. Click here to review the message board rules.

[Schmendrick54]

53. A TNR Opinion Piece about Dean's Tax Plan

Jonathan Cohn thinks Dean is right on taxes. Of course, it is just another opinion, and from TNR at that, but he does have a few numbers to back up his assessment. Here's a link.

"http://www.tnr.com/doc.mhtml?pt=PG1fDdNHXD62kv6Ocz4iX2%3D%3D"

Regards,
Schmendrick

[AP]

57. This just tells me more about TNR's editorial mission than it says about

Dean's tax plan.

I am more than confident in my ability to read a tax plan and discern from it who beneftis and who is burdened.

Also, Cohn's conclusion doesn't make sense to me: "If a candidate like Dean is willing to risk popular backlash by running against middle-class tax cuts, then he probably has far more resolve than his rivals to fight for fiscal responsibility." That does not logically follow. To me, Dean looks like a guy who doesn't want to shif the tax burden off the middle class, and he's going to buy a health plan with it, and give it away to businesses, and say that you got the health plan, so that should be enough. Ironically, he's running on a "tax and spend" platform.

[quaker bill]

55. More of the discredited republican tax-cut meme.

Reagan started selling this stuff 20 years ago and it has worked it's way into our discourse as a new apriori assumption.

We are the least taxed industrialized western economy. We were so under Clinton and continue to be so now. Many capitalist economies thrive with significantly higher marginal tax rates.

I agree that since Reagan, actually probably since Kennedy, the tax burden has steadily been shifted from wealth to work and from the rich to the middle class. I agree that over time this should be corrected.

However, the essential false dichotomy offered us is the notion that you can have tax cuts and social spending. This formula has been tried twice recently. On both occasions massive deficits were the direct result.

The line of logic you posit was the basis of the Reagan tax plan in the 1980's and the basis for criticism of Clinton's tax increase in the 90's. In both cases the results obtained economically were exactly the opposite of what this model predicted.

Under the 1980's tax-cut regime real wage growth for the middle class was stagnant or negative. During the 90's real wages for the middle class grew, interest rates declined, and overall, the economic outlook for the middle class improved.

The republican mantra that tax cuts cause economic growth in a manner that balances the budget and improves the economic outlook for the middle class is simply not supported by the evidence.

Your understanding of John Maynard Keynes could use some adjustment as well. Keynes had no problem with taxes as a means of income redistribution and felt that it was appropriate to tax wealth progressively and use the money to invest toward the betterment of the middle and working class. He did not conclude that taxes in and of themselves would significantly hamper the growth of a capitalist economy.

He did support a government deficit during recessions or the general concept of countercyclical fiscal policy.

[AP]

56. That's a lot of text for someone who isn't disagreeing with me that much.

But you do seem to not care that much about allocation of the tax burden.

Here, let me sumarize:

1) Americans could stand to be taxed more.

2) Keynes thought the best way to build a strong, competitve, fruitful economy was to build up a middle class. If he saw the way the US allocates the tax burden he would have talked about taking the burden off people who work for a living in order to achieve a wealthy middle class.

3) If you don't think the allocation of the tax burden is unbelieveably screwed up, read Wealth and Democracy, or even The Twilight of Equality.

4) I don't think you've addressed my point that raising taxes on middle class earned income isn't the ONLY way to raise money to spend on social programs. Money is flowing plenty of places in the US economy which are much less socially valuable and useful than between employer and middle class employee and they're taxed at MUCH lower rates in those other avenues. There's a LOT of income that could be taxed other than middle class earned income.

And a big reason we have a society that is run for the wealthy, and which destroys the effectiveness of the middle class to do their Keynsian-a-go-go is BECAUSE we reward those other exchanges of wealth by taxing them at low rates.

So there is a very false dichotomy that Dean perpetuates: rasing taxes on the money employers give middle class employees is NOT the ONLY way we're going to get universal health care.