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1. Steve is not talking about the low income housing credit, he is talking about Mortgage income deduction. ~$364 Billion/year. This
http://nationalaglawcenter.org/wp-co...crs/R41596.pdf
Similarly, the employer healthcare tax credit has the net effect of injecting money into the healthcare system by subsidizing it. If you're a fan of Ron/Rand Paul, you'll remember their (accurate) trope that when you subsidize something, you get more of it. In this case we are subsidizing expensive health care. Much in the same way that our college loan system has allowed educational costs to balloon to the point where they nearly ate my generation, and in the same way that low cost loans (both from predatory lenders and through legislation that allowed low income home loan recipients to overextend their budgets) destablized the housing market. I think there's plenty of room for bipartisan consensus here.
Yep, my bad - I got that above.
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2. .
The average household in the bottom quintile received $29,015 in benefits and paid $4,251 in taxes, generating an average fiscal deficit of $24,764 per household. In the top quintile, the average household paid $69,704 in taxes and received $21,515 in benefits and services, yielding an average fiscal surplus of $48,189 per household.
Ignoring some specifics, let's just say that everyone gets a bunch of stuff for being an American, and it's around $21.5k. Because they need assistance, the lower income brackets get an extra ~$8k. I think these numbers are a little more visceral, but they're from the same report. Focusing on the idea that there's simply a population on either side of the zero is overly simplistic, in my opinion. (The highest quintile begins at household income ~ $265,000.)
That is a clean and simple way to say it, yes, and very few people understand it.
Also there is something called the $60k benefit curve, where there is kind of a drop off at that point. It is a hard line and I am game for making it a bit more fuzzy.
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3. Is this such a bad thing? And by "this" I mean redistribution of wealth. I think this is exactly where the principled argumentation can become toxic.
On a very first pass analysis, yes, "Taxation is theft". This is an ideological wellspring from which much of fiscal conservatism springs, and while it's useful to remember, it's not near capturing the entire story. I think there's certainly an argument to be made for hugely simplified tax curves, but that's never what's actually proposed. I find the focus on estate tax particularly rankling - though it's easily dodged by practical measures
To understand why redistribution of wealth is necessary and important, one needs to to understand a fair bit of national macroeconomics. Monetary velocity is an important driver of a market economy, because the number of transactions is analogous to the speed of information processing in the market. It's been robustly demonstrated that injection of money into a system, and preferentially to lower income consumers, increases national economic output. This is the "pump priming" mechanism. Lots was written about this in response to the 2008 financial crisis. I'm personally of the belief that the QE could have been handled even more efficiently by shunting more money to consumers and less to banks, but even so the post-facto reports generally lionize QE.
This is sort of the basis for the arguments between Keynesian and Austrian financial positions.
I defer to Christina Romer in this argument (Obama's former finical adviser, and a Berkeley professor) - because it really is an amazing work.
https://newrepublic.com/article/1201...crisis-defense
Here is the link to the paper. http://www.nber.org/papers/w13264
The basic is very consistent: For every tax dollar you take out, it results in the decrease of the GDP by $3.
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"This paper investigates the impact of changes in the level of taxation on economic activity. We use the narrative record -- presidential speeches, executive-branch documents, and Congressional reports -- to identify the size, timing, and principal motivation for all major postwar tax policy actions. This narrative analysis allows us to separate revenue changes resulting from legislation from changes occurring for other reasons. It also allows us to further separate legislated changes into those taken for reasons related to prospective economic conditions, such as countercyclical actions and tax changes tied to changes in government spending, and those taken for more exogenous reasons, such as to reduce an inherited budget deficit or to promote long-run growth. We then examine the behavior of output following these more exogenous legislated changes. The resulting estimates indicate that tax increases are highly contractionary. The effects are strongly significant, highly robust, and much larger than those obtained using broader measures of tax changes. The large effect stems in considerable part from a powerful negative effect of tax increases on investment. We also find that legislated tax increases designed to reduce a persistent budget deficit appear to have much smaller output costs than other tax increases."
That means if you reduce taxes, in total, you increase GDP. This results in a see-sawing affect where when we come into a point of economic crisis we elect leaders who reduce taxes, until we are doing well, and then we elect leaders to raise taxes.
It also means that if we had simply reduced spending and taxation, say 16% average instead of 18%, due to a very robust 1:3 return ratio on GDP over the last 30 years, then currently our GDP could be significantly than it is now, and even though our tax system has a reduced income over the first decade, after that it would match, then increase over time, so that our Tax Revenue take now would be almost $6T, or more. Allowing us both more to spend on those in need, but also allowing us far more financial wealth, because our GDP would be significantly higher.
We have had 3 large tax cuts in the past, known as the 1920 tax cuts, the JFK tax cuts and the Reagan tax cuts. The income of the average, lower and middle class worker increased by between 60% and 66% for 8 years following that tax cut.
Like in the report, this is a very robust account.
The problem is, when it starts working, we start spending. Reagan's biggest problem is they started spending more than they were taking in, even though tax revenue increased as expected, congress spent even more!
If we had long term restraint with spending, and hence taxation, just like in real life, we would have a larger economy and be further along.
We don't have that resolve. We want to spend it now, it makes us feel good. As we should!
The problem is by doing so we hurt ourselves in the long term, and reduce where we could be if we enact long term fiscal constraint.
We are both old enough to have seen this. We really could be making 60% more than we are now if just in our adult life the US Government had spent just 2-3% less over the course of our adulthood. Social Security wouldn't be running out, Welfare wouldn't be breaking the budget, and more money for schools, healthcare, everything really.
Spend it now, not have it later, spend it later by giving up some now.
This is Old Woman advice. It is nothing special, just very much ignored.