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September 3, 2010 Trickle down, Paul Ryan, and smoke & mirrors The only thing worse than rich people saying tax cuts for the rich will help everyone else is everyone else believing it. Tax cuts on the rich compared with no tax cuts at all will help everyone else. But compare tax cuts on the rich with tax cuts for everyone else, and it is obvious which scenario helps everyone else more. If you and I are in a closed economy and someone gives me $100 it certainly helps you, but not as much as if that someone had given the $100 to you instead of me. Before I detail exactly what makes Paul Ryan’s plan smoke and mirrors, I must assert myself as a champion of lower taxes, smaller government, and reduced regulation. These are the core concepts of my detailed plan to balance the budget and create jobs. If wanting to focus those tax cuts on the masses rather than on the few, the powerful, and the elite makes me not a true conservative, then so be it. A conservative blogger who moderated Monday night’s debate (audio here) has already said that my ideas “won’t make me any fans among….the conservative grassroots.” That’s fine. I’m running to get out specific ideas and solutions and to speak the truth, not to cater to a dogma. Ryan’s plan aims to turn this country into a society similar to pre-revolutionary France where the top 3% paid no taxes, and where everyone else carried the burden. It would greatly favor those whose money works for them at the expense of those who work for their money. Specifically, Ryan's plan would end all taxes on investments: interest, capital gains, dividends, and estate tax. Of course regular people have income from these sources, but income from those sources is a small portion for all but the richest people in our country. Ryan's plan also would end the corporate income tax. All of these taxes would be replaced with a European style Value Added Tax (VAT), which is just another way of saying a consumption tax or a national sales tax. Consumption or sales taxes are regressive; that is to say that they are disproportionately burdensome on lower incomes. Poor people consume a higher percentage of their income than rich people consume. Smoke and mirrors trick #1: 1. End every tax that taxes the majority of rich people’s income and replace it with a regressive tax that taxes a higher percent of lower incomes. Ryan’s plan also offers a choice between either the traditional income tax structure (with its various brackets and deductions), or a simplified plan that taxes 10% of the first 50k of income and 25% of all income beyond that, but with no deductions. The Tax Policy Center has estimated that the simplified alternative would most benefit those making between 100k and 500k. The simplified alternative also would lead to $6-$7 trillion dollars less tax revenue over the next decade if everyone chose their best tax saving plan, something that any $50 software can figure out. Smoke and mirrors trick #2: 2. Blow a huge hole in the deficit, giving tax cuts to those making 100k-500k/year. Ryan’s plan brags of ending the Alternative Minimum Tax (AMT). The AMT taxes your first 47k at 0%, and then everything up to 175k at 26%. The Ryan alternative taxes your first 50k at 10% after allotting for a standard deduction of roughly 10k, then everything beyond that at 25%. Smoke and mirrors trick #3: 3. Replace the AMT with a plan that will have most incomes pay at least $4000 more, and try to pass it off as an improvement In short, the tax side of Ryan's plan shifts the tax burden downward onto those who can least afford it. It produces the real possibility for the ruling class to pay a much smaller percentage of their income than everyone else does. Thomas Jefferson believed in the estate tax because he feared precisely what is happening today. Jefferson feared that one day a ruling class would rise up and be so powerful that it could challenge and control our nation’s government. Many would agree that the bank bailouts announced the arrival of that day. Ryan wants to make sure that the sun never sets on these new Masters of the Universe. September 2, 2010 Harvard Econ Professor endorses payroll tax cut Greg Mankiw, professor of economics at Harvard University, prefers a payroll tax cut over any other type of tax cut to get the economy growing again. Excerpts:
I have long championed a payroll tax cut over any other type of tax cut as part of my detailed action plan to close the deficit and create jobs. The most direct way to expand payrolls is to cut the payroll tax September 1, 2010 Republican Candidates' Debate All five candidates for the GOP nomination for Maryland's 2nd Congressional District met in a public forum on August 30, 2010, at the public library in Towson. I arranged the event, and Matthew Newman of OldLineElephant moderated it. Matt Newman audio recorded the evening. Audio recordings are in three parts and are available here: Opening statements, in Part One, are in
this order: On November 2, 2010, Dutch Ruppersberger needs to retire. All five Republican candidates are honorable men offering themselves for public service. Any one of the five would be better than Dutch. September 1, 2010 Does either party deserve to lead? Peter Morici, an economist and professor at UMD who frequently testifies before Congress, has endorsed the exact tactics that I am using: getting specific with a credible action plan to close the deficit and to create jobs. Excerpts from Morici’s article:
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