We Need an Income Floor, Not Necessarily a Ceiling

One of the enjoyable things going on right now in politics is an actual debate about taxes. You have Michael Bloomberg and Howard Schultz saying wealth taxes are bad for the economy. You have AOC saying we should tax “the $10,000,000th dollar at 70%,” or something. And you have Elizabeth Warren calling for a wealth tax, on savings, of the top 0.01%. This is a healthy, robust debate, one we need. We’re running $1 trillion debts, our nation is crumbling of neglect at home, and our tax code is a total mess, thanks to everyone from Ronald Reagan to Paul Ryan.

I think we’re having the wrong debate though. I’m not saying we shouldn’t debate millionaires and billionaires, and their tax bills, but I think that debate should take a backseat to how we tax our poor and middle class. The discussion we need to be having is how to create more tax free money at the bottom of the income bracket, essentially “shifting” the loopholes to the working class people.

Nobody should pay taxes on their first $30,000 of income. Literally nobody. Make all of that money tax free, because that’s literally what you need to survive. The first $30,000 pays for your food, your housing, your clothing, and your health care (in fact, I’m probably underestimating it). This money shouldn’t be taxable. If I’m really being honest, people making below $30,000 should be guaranteed a tax return that gets them to $30,000, essentially creating universal guaranteed income (UGI) for all Americans. I’d up this number to something like $45,000 for couples and $60,000 for families of four. For those that call this crazy and fiscally irresponsible, I remind you that we would save much more when we don’t need as much money in welfare programs.

I would apply this principle on taxes besides income too. The payroll tax would start at $30,000, and would certainly not be capped at $132,900 (as it is now), if capped at all. Corporations and businesses would be incentivized in the tax code to be good corporate citizens, including paying a living wage, allowing unionization, giving paid vacation and medical leave, and offering health insurance and retirement to workers. If you start applying the principle of a robust income “floor,” or safety net, you start solving a lot of the failure in our economy. By the same token, companies paying below a living wage and not taking care of their workers should pay more. Essentially if we’re paying the UGI I described above to someone who has a job, their deadbeat employer should be paying taxes that make up the difference.

I’m not sure how I feel, to be honest, about wealth and windfall tax plans. I don’t oppose them. I’m also not sure I love them. What I am more bothered by is the existence of the working poor in America, not as much the super rich. We need to take better care of Americans living in poverty and even middle class conditions, and we should draw up a tax code that makes that happen.

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Math Still Needs to Matter in Government

The moment that Bernie Sanders went from “harmless old man” to a problem for me happened in New York. It wasn’t primary day though. It was when he bombed the New York Daily News Editorial staff interview. It’s not a matter of his ideas, but rather that he really had no idea how he would do any of it. There was no substance in his plans. Just catchphrases. Bernie was pretty much exposing himself as unprepared to be President.

I’m not sure Democrats are in a better place with the left as we approach the three year mark. Last week I engaged with a Twitter follower who supported Bernie and loves AOC and noted the lack of a funding plan for many of their big ideas. Their response was chilling to me- that we need to stop holding political leaders to the standard of paying for their ideas, because “that leads to conservative outcomes.” In other words, will away the inconveniences of governing.

Alexandria Ocasio-Cortez, Tulsi Gabbard, and Ro Khanna voted against the House Rules package crafted by Nancy Pelosi on January 3rd, and their stated reason was opposition to a rule called “Pay Go,” a provision that requires you to find the revenue, through taxes, spending cuts, or spending shifts, to finance any new plans. The rule came about in her first tenure as Speaker, after George W. Bush has cut taxes, fought two wars, passed Medicare Part D, and done No Child Left Behind with no funding mechanism- all as debt. The United States was running trillion dollar debts in those days, as we are now, after the Trump-Ryan 2017 tax cut debacle.

It’s important to remember two key things about Pelosi’s “Pay Go” rule.

  1. She can lift it for major legislative priorities, and she pledged to do so. While “Pay Go” applies day-to-day, it is not a hard and fast rule. It is there to institute discipline on the average, but the Speaker can instruct the House Rules Committee to lift it on priority legislation, such as Medicare for All, if she chooses. She has pledged, as I said above, to do so when major priorities come up.
  2. We are projected to pay $364 billion in FY 2019 on debt services (interest). That’s what we’re paying just to finance our debt- not fix a single program. You could dramatically expand Medicaid or improve ACA subsidies with that, if you weren’t paying it to rich people for buying our debt. You could finance a major green jobs bill, an infrastructure bill, or any number of other major bills. We quite literally spending half the Pentagon budget to sell bonds to finance our debt. This is clearly a waste, to any sane person.

The fiscal behavior of Republicans, post Bush 41 raising taxes to deal with deficits, has been atrocious. They only worry about costs when money is being spent to help poor and middle class people, and otherwise are willing to bankrupt the country. The idea behind Pelosi’s rules package was simply to not be Paul Ryan– not block a national health care bill.

But back to the argument made at me on Twitter- screw paying for the things we want, just pass them. I get the moral equivalency argument, why should Democrats limit themselves when trying to do good things, Republicans just do the bad stuff they want. The difference though is that Democrats are the party that believes in using the government to solve problems, so they have a responsibility to make it work right. Running up more debt because math is hard is setting up the government for financial issues later. The price of debt (interest on bonds) is pretty much directly tied to the price buyers are willing to pay at auction, which is based on their confidence in the investment. It’s worth being responsible, if only to check that.

The real problem I have with the lefties that argue debt doesn’t matter, and we shouldn’t have to fully fund “good” programs is that they’re just lazy- there are actual questions to some of these questions, which people sometimes even get close to proposing. In AOC’s defense (I don’t do that often), proposing a 70% tax on income over $10 million, which she loosely suggested to fund her “Green New Deal” is popular, not overly radical, and has historical precedence. Elizabeth Warren’s suggestion for a windfall tax on wealth may be plausible. You could expand Medicare and Social Security massively if you raised the ceiling on payroll taxes to apply to 90% of earnings, as Ronald Reagan did in the 1990’s- and the majority of earners wouldn’t even pay a dime more. While you can’t realistically cut the Pentagon the way some on the left propose, a 10% cut of waste spending on weapons we don’t even use could finance a nationwide free community college and trade school program that would greatly alter the landscape on college tuition costs. There are actual ways to do their plans, and you don’t even have to be brilliant to figure them out. They’re just lazy, or willfully ignorant.

My guess is that some of these lefties know this, but still want to live in fiscal fantasy land for one reason- politics. Selling tax increases is hard. A national health care plan and climate change plan was incredibly popular in 2007 and 2008, but by 2010 it was contributing to Democrats losing the House. The devil is always in the details. Unless you don’t do the details, and just say we don’t have to pay for it. Then you can live in ignorant bliss forever, and propose any crazy idea you want, without consequence.

A Bold New World View, Part 7- How Business Works

Read Part 1 here.

Read Part 2 here.

Read Part 3 here.

Read Part 4 here.

Read Part 5 here.

Read Part 6 here.

Benevolence isn’t in the vocabulary of a success corporation. Corporations only exist to make money- nothing more and nothing less. If you start a company, and want your values to underlie the operation, keep it profit- that’s totally your right. Even in a private company, you’re going to run the operation efficiently enough to make money, but you can make decisions to match your values at least.

Corporations have a job to do- increase the value of their shares on the stock market, turning a profit for shareholders. Whatever the market conditions allow them to do legally to do so, they should do. Many of their shareholders are almost invisible in the process, being held in pension and retirement funds, by silent partners, and by other non-individuals. With such detachment from the process, these entities only care about the stock prices and dividends getting bigger.

Corporations, and really any business, are going to run with this in mind. If a grocery store needs five check-out lanes open at 9pm on a Friday night, guess how many lanes will be open? Yes, policy can have an influence, but not to the extent we pretend. A tax cut might allow a cash-strapped company (to be read as failing) to hire people that they wanted to, but couldn’t afford. It also might give a company the money to invest in research and development, when they didn’t before. To be clear though, banks are primarily responsible for loans that help companies do these things. We should not, on the whole, cut taxes in an effort to get rich people and companies to hire- that will only work when their primary issue is having enough money to hire. More often, the chief concern of a company is increasing the size of the dividend for shareholders, or increasing stock prices- to all be read profits. If the chief priority is usually profits, a tax cut will usually go into increasing profits.

Democrats will usually get angry that companies behave this way, and call them greedy. Republicans will defend them, and tell us to trust corporations and the rich, because they’ll do the right thing in the end. Both are missing the point. This emotions are not things corporations have. It’s not part of how they run.

The obvious answer to corporate misdeeds and worse is simple- government. You write a tax code that encourages good behavior- environmentally friendly actions, accepting unions, manufacturing here, honest behavior, living wages, pensions, and health care- as opposed to now, where often times the tax code encourages the bad behavior we oppose. You regulate corporations to make sure they don’t do truly harmful things to our public. Finally, you prosecute fraud and actual crimes. This is the government jobs. Most companies will do as much as we allow them, as much as makes them money without any risk. We should actually hope they do too. Any of us who have a retirement fund of any kind are relying on corporations to make us as much money as possible to live off of in our old age. We should just also hope that our government does it’s job too, and makes sure they play by the rules.

One Month of Christmas, Day 4

Hey there, it’s Wednesday, November 28th, 2018, 27 days until Christmas. It’s cloudy and windy out, but not terrible- just how I like it. Here’s today’s random thoughts…

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Giving Companies Money Does Not, and Has Not Ever Worked

So GM is taking their tax cuts and subsidies and closing a few plants, laying off around 15,000. Who would have ever guessed this? This has never happened before, right? Right?

How many people a company employs basically depends on how many people they need. Corporations don’t hire more people unless they need it. Sure, some sectors of the economy may use some portion of new money to expand their business or do more research, but that is not the norm. Typically, if you hand out tax breaks and subsidies to corporations, the money goes back to shareholders and in bonuses for execs. Tax breaks don’t typically stop corporations from closing factories or outsourcing jobs. Why would they? Their job is to make a profit, not employ the public. They hire to need.

What on earth should we do? How about an actual re-write of the corporate tax code? Make a business’ tax rate relative to their behavior and societal impact. Companies that pay well, offer benefits and pensions, keep the environment clean, allow unions, and do the things we want as a society can pay below the standard rate, because they’re already adding benefit to our society. Companies that pay below a living wage, pollute, outsource, and hurt our public should pay more. It seems simple to me, they’re handing us their bills to pay.

Just a thought…

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I Love the Stones, But…

I’ve seen The Rolling Stones four times. I’ve seen them from floor seats, from the last row of old Giants Stadium, in the rain, and inside. They’re one of the greatest live shows you’ll ever see in your life- if you can afford it.

The cheapest nose-bleed seat I saw during today’s “pre-sale” was $163- in any city. I suppose if you’re rich enough, you’d just drop $1,900 to be in the pit, but for the working class fans of the Stones, that’s not happening. $163 to sit all the way upstairs is steep- especially to buy multiple seats.

It’s not exactly a great look for the bad boys of rock n’ roll.

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Nancy Don’t Lose

You’ve probably read a lot about how Nancy Pelosi might not be the next Speaker. You may even have read about how she can’t get 218 votes. Don’t over read that.

Nancy Pelosi won today’s Democratic Caucus vote 203-32. She will be the Democratic nominee to be Speaker of the House. Sure, she needs 15 more votes. She’ll get them. You can bank on that.

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Cutting it short tonight. More tomorrow.

Math and Big Government

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Bernie Sanders is a political quagmire to me. He has ideas, some of them really good, that I agree with. It’s like, what actual Democrat/liberal is against expanding access to health care through the Medicare system? No one that’s honest. What Democrat is actually against making college affordable? If you again answered no one, you’re right again. The problem with all of these ideas is two fold- costs and politics. You simply can’t spend on into forever without any regard for actually ever paying those bills. You have to have a plan to finance these big ideas, and it has to be a plan that can pass Congress. This is where politics are hard, because you see, the public doesn’t want to pay higher taxes, so they are naturally skeptical when you either come out and tell them they need to pay higher taxes, or propose lots of new government spending and claim that taxes won’t go up. A skeptical public votes out Congress, and Congress people don’t want to be voted out of office. As a result, it’s not that easy to get Congress to vote for big government plans, there are real limits to a President’s power of persuasion here. Frankly, you shouldn’t want to see your members voted out of Congress for the purpose of just passing a bill or two, as we see the repercussions of losing elections now in the era of Trump’s Republican Congress.

Anyone who just throws out big proposals, big ideas without all the details and nuance to back them up, shouldn’t be taken seriously. This goes for Paul Ryan and his magic math on the tax cuts. It went for George W. Bush’s magic war theory, that we could pay for his Middle Eastern nation building all on the credit card. It’s true now with some of the ideas that Bernie Sanders is throwing around as his agenda. It is not a sufficient answer to say “tax the rich, cut defense spending,” when talking about how you’re going to finance big plans, because we all know those things are really tough to do- if they were easy to get past Congress, Democrats would have done them long ago. Even modest tax increases on the rich and modest cuts to Defense Department spending would be met with fierce opposition, and would be very difficult to pass- let alone creating $3.2 trillion annually to give everyone Medicare. Obviously higher taxes for the rich and a re-assignment of budget priorities is needed to make these policy goals happen, and it’s worth fighting for, but don’t pretend that this can be done easily, and that it’s a very simple solution. It’s not.

I have trouble taking Senator Sanders seriously though. He called the middle-class tax cuts portion of the GOP’s tax bill good on CNN the other day. In fact, he said Congress should have made them permanent. Is that position without merit? No, not at all. At the same time as he’s saying that, and then trying to claw back his statement, one of his financing ideas for single-payer health care (Medicare for All) is a 4% premium on every household in the country- a middle-class tax increase, even if it is a good idea. These positions don’t square. Sure, households might save money on health insurance premiums that exceeds their tax increase, perhaps, but that doesn’t mean we’re not raising taxes- and that’s assuming the 4% premium on every household would cover the costs- a subject of great debate. Not everyone is going to want to pay higher taxes to finance a national health care system, even if it will make costs cheaper for them or others. That’s just political reality.

My chief beef with Bernie Sanders is not the ideas he espouses, but the lack of reality he attaches to them, while criticizing Democrats for making tough decisions to try and pass things. I think back to his disaster interview with the New York Daily News in April of 2016, during the Presidential Primaries, where he was clearly unprepared to discuss the details of his plans for the nation. What happens to the employees of the “big banks” when you break them up? Who breaks them up, and under what authority? How exactly do we finance single-payer health care and free college education? If defense cuts are part of that plan, what happens to the people who work in manufacturing defense weaponry? Here he is again, after correctly admitting that his health care plan would require a tax increase, saying a middle-class tax cut is a good idea- it’s as though no actual facts or plans matter at all here. Now, Bernie is not the first political leader in this country to propose a bunch of stuff and not have the details down, so I could give it a chance- he’d clearly have to compromise, make deals, and come to a concrete plan once in office. The problem with Bernie is that he’s also built his political brand on not being compromising, of being entirely values driven, and spending literally his entire political career in Congress being a critic of the Democratic Party that he chooses to not join- for compromising, making deals, and getting to concrete plans in the end that are not always perfectly progressive. I either have to believe that he’s not serious, and won’t get things he proposes done (on purpose) to play politics, or that he’ll fail because he has no clue how to actually govern, or in the best case scenario, that he’ll be totally hypocritical in his process arguments, and will make deals and play politics with the best of them.

So no, if you’re proposing any form of expanding access to health care through government action, this tax bill is not helpful. The temporary and small middle-class tax cuts in it are not worth the damage they’ll do, especially because having less tax brackets now will make it harder to change tax law in the future. There, I said it for him, just in case you didn’t think he was playing politics like everyone else.