Results 1 to 14 of 14

Thread: Tax and spend

  1. #1
    Join Date
    Nov 2005
    Location
    Wayland MA
    Posts
    1,431

    Default Tax and spend

    Interesting article in the Globe his morning about the need for taxes and in fact tax increases. Certainly, an argument can be made that we should cut taxes and spending (see Wikipedia for the numbers), but that argument needs to be accompanied by specifics around what spending to cut.

    Note that Social Security, Medicare, Medicaid, interest on the national debt, and defense represent 94% of 2010 revenue, and that adding in other mandatory expenditures raises that to 118% before we even begin to think about whether we want to fund veterans affairs, education, energy, the EPA, or other services currently at 1.5x revenue.

    So, what's our path forward?

  2. #2
    Join Date
    Mar 2008
    Posts
    448

    Default A different approach

    The right-wing conservatives have succeeded in hypnotizing the masses into believing their mantra, “Small government, good. Taxes, bad.” This is unfortunate because the real problem IMHO isn’t the size of the government and it isn’t taxes – it’s the lack of accountability & transparency.

    In a perfect world, there would be no waste, corruption, fraud or mismanagement of our tax dollars and the government would run like a well-oiled machine, providing certain services more efficiently and cost-effectively than the private sector could do. This is not the case, of course - never has been and never will be. However, the situation is far worse than it needs to be simply because the politicians have succeeded in getting the masses’ angst focused on the wrong thing, a carrot on a string that they can perpetually control with idle promises of lowering taxes.

    At the federal level, we’ve had things like the “bridge to nowhere” and at the local level we’ve had the School Committee routinely approving invoices without knowing what they were for (they still do.)

    At both the federal and the local levels, we are just throwing our money into a pool and hoping it gets spent wisely. With numerous websites devoted to uncovering waste, corruption, fraud and abuse and with “60 Minutes” and other media doing stories for decades now of things like the army spending $17,000 for a household hammer, there is ample evidence that we need to have much better accountability and transparency. Before we take a position on whether our taxes are too high or too low to cover the costs of government, and before we consider voting for another override at the local level, we need to first get a grasp on how our money is being spent.
    John Flaherty

    Any views expressed are NOT mine alone.
    Wayland Transparency - Facts Without Spin
    http://www.waylandtransparency.com/

  3. #3
    Join Date
    Nov 2005
    Location
    Wayland MA
    Posts
    1,431

    Default

    Quote Originally Posted by John Flaherty View Post
    The right-wing conservatives have succeeded in hypnotizing the masses into believing their mantra, “Small government, good. Taxes, bad.” This is unfortunate because the real problem IMHO isn’t the size of the government and it isn’t taxes – it’s the lack of accountability & transparency.
    Note: anyone distracted, confused, or offended by my excerpting only a small sliver of the above post has absolutely no recourse at all. Other than simply reading the above post in its entirety.

    As a nation, we face many problems, government size (is it too small? or too big?) and taxes (are they too high? or too low?) chief among them. I might add an overly wide gap between the haves and have-nots, the lack of an effective energy policy to address a threatened environment, health care that's been triaged but not truly fixed, and a Senate and House focusing more on winning the next election than serving their constituents today. I could even be convinced to add my agreement about accountability: despite our government's inability to resolve the challenges that we face, we appear unable to find and elect representatives committed to that resolution.

    But transparency? Were we ruled by a totalitarian leadership successful at keeping information from the populace, I might agree. But in the 21st century United States of America, at all levels of government, there is more than enough information available. In fact, one would not be out of line to argue that too much information challenges our ability to focus on necessary information.

    Transparency is important. It's just not the problem that other issues pose.

  4. #4
    Join Date
    Mar 2008
    Posts
    448

    Default

    The notion that there could be “too much information” sounds almost quaint. The genie’s out of the bottle in this internet age and there’s no turning back.

    The idea of those in power dolling out only as much information as they think we need sounds almost dastardly. It is for this reason that we have things like the Open Meeting Law, which tends to be routinely and cavalierly ignored by some, perhaps because they feel they know what’s best for the rest of us and they feel that we “can’t handle the truth”.

    Transparency is a cornerstone of our democracy. Else we are being asked to elect officials that we should blindly trust as always be working in our best interests. History has shown us that to do so would be foolish.
    John Flaherty

    Any views expressed are NOT mine alone.
    Wayland Transparency - Facts Without Spin
    http://www.waylandtransparency.com/

  5. #5
    Join Date
    Nov 2005
    Location
    Wayland MA
    Posts
    1,431

    Default

    John, by "quaint," are you suggesting that information overload is not currently a problem? That doesn't gibe with my experience.

    Regarding the hypothetical you construct about "those in power" doling out information in a "dastardly" manner, I think that you misunderstand the purpose of the Open Meeting Law. It says nothing about WHICH information public officials release, but rather, HOW said officials are to go about releasing information. The difference is significant.

  6. #6
    Join Date
    Mar 2008
    Posts
    448

    Default

    Quote Originally Posted by Jeff Dieffenbach View Post
    John, by "quaint," are you suggesting that information overload is not currently a problem?
    No, I'm not.

    I think that you misunderstand the purpose of the Open Meeting Law. It says nothing about WHICH information public officials release, but rather, HOW said officials are to go about releasing information.
    Released?
    OPEN MEETING LAW, G.L. c. 30A, §§ 18-25 (Effective July 1, 2010) says:
    "Except as provided in section 21, all meetings of a public body shall be open to the public."

    Let's not get off on a tangent about the OML when my point was that transparency (the OML being only one part of that) is what we need to have in order to ascertain whether taxes or spending (the original post of this thread) are where they should be.
    John Flaherty

    Any views expressed are NOT mine alone.
    Wayland Transparency - Facts Without Spin
    http://www.waylandtransparency.com/

  7. #7
    Join Date
    Nov 2005
    Location
    Wayland MA
    Posts
    1,431

    Default

    Just to be clear, John, *you* took us on the "information doling/OML" tangent, not I.

    As for transparency, I think that we're in agreement--we both think that it's critically important. Where our opinions diverge, though, is on whether lack of transparency is among the biggest problems we currently face in government. I say it's not.

  8. #8
    Join Date
    Mar 2008
    Posts
    448

    Default

    Quote Originally Posted by Jeff Dieffenbach View Post
    Just to be clear, John, *you* took us on the "information doling/OML" tangent, not I.
    Just to be clearer, I did not take us on a tangent. Of the 7 sentences in my post, one of them referred to the OML. It was intended as an example of transparency, which is what the other 6 sentences were about. It was not intended as an invitation to go down a different path, which is what you proceeded to do.

    As for transparency, I think that we're in agreement--we both think that it's critically important. Where our opinions diverge, though, is on whether lack of transparency is among the biggest problems we currently face in government. I say it's not.
    You've made your position on transparency very clear, even starting a thread on the subject last year which wondered if too much transparency is a bad thing.

    But to take us back to the topic at hand - taxes and spending - it will be a lot easier for people to get behind future overrides, and take a position on whether taxes or spending are out of control if they can get a handle on how our money is currently being spent.

    There have been many examples at both the federal and local levels that our finances were not being handled as efficiently as they could, so that there is good reason to think that savings - maybe big savings - could be realized by simply streamlining, consolidating and eliminating waste.
    John Flaherty

    Any views expressed are NOT mine alone.
    Wayland Transparency - Facts Without Spin
    http://www.waylandtransparency.com/

  9. #9
    Join Date
    Nov 2005
    Location
    Wayland MA
    Posts
    1,431

    Default

    Given the original topic of federal taxes and spending, the award for Best Tangent of the Thread clearly goes to you, John, for shifting gears to the Wayland School Committee and the Open Meeting Law.

  10. #10
    Join Date
    Mar 2008
    Posts
    448

    Default

    You believe what you have to believe, Jeff.

    Regardless of my examples of the WSC and the OML, each of my posts above has remained on topic in making my point that transparency is needed in order to get a handle on taxes and spending.
    John Flaherty

    Any views expressed are NOT mine alone.
    Wayland Transparency - Facts Without Spin
    http://www.waylandtransparency.com/

  11. #11
    Join Date
    Nov 2005
    Location
    Wayland MA
    Posts
    1,431

    Default

    And my reply is the same: transparency isn't even close to the top of the list of problems resulting in our taxing and spending being out of balance. In no particular order, those problems include campaign finance rules, the desire for power at the expense of solutions, the complexity of the challenges we face, and the difficulty of communicating that complexity to the voters, and general human irrationality particularly as it manifests itself in selfishness and shortsightedness.

    In an ideal world, the majority would define the services that it wants and a plan for paying for those services. For many reasons including the ones that I've listed above, too many politicians can't or won't make that happen.

  12. #12
    Join Date
    Nov 2005
    Location
    Wayland MA
    Posts
    1,431

    Default

    I should note, John, that I'm appreciative of your engaging in the conversation. With people coming out of "summer mode," I hope that we see a marked increase in participation on the DF. It's a potentially great forum for discussion and taking action.

    And with respect to taxation and spending, John, I suspect that you and I are in reasonably strong alignment. I'd like to see a healthy but not extreme gap between the haves and the have-nots, with a strong safety net for those on the unfortunate end of that spectrum. I'd like to see strong incentives for people to earn their way up that spectrum and in general strong personal accountability. I'd like to see a strong middle class that has to work for, but not stress over, employment, health care, the quality of their children's education, sending those children to college, and retirement. I'd like to see a budget that over time is balanced, saving deficits only for when economically necessary and viable.

    For all of the above to work, I suspect we'll need higher overall taxes than what we currently have. We will likely also need both less expensive health care and perhaps less health care in general. The tax burden should be progressive without being punitive at the higher end. And most importantly, that tax burden should be decided on democratically--it isn't the government taking money from the people, it's the people choosing how to pay for a society that works for both its strongest and weakest members and creates an environment in which we all want to live.

    I don't know how to get there, but my optimistic nature has no doubt that there's a path. I just hope that it doesn't take calamity to start us looking for it.

  13. #13
    Join Date
    Nov 2005
    Location
    Wayland MA
    Posts
    1,431

    Default

    Interesting slate.com article by Eliot Spitzer about balancing the budget ... or not.

  14. #14
    Join Date
    Apr 2011
    Posts
    27

    Default

    According to me, the bigger issue is not taxation and spending but balancing of budget. Some of my points are:

    a. US Federal spending is about 25% of GDP and in a generic Western European country; it is between 40-50% of GDP. But even then both countries have a deficit of 5-10%. We can always implement VAT @ 20% and increase revenues like Western Europe but would it solve the deficit.

    b. As a country, we first need to come to an agreement about the services the government needs to provide and the cost of it. I don't care if it is at 10% or 25% or 35% or 50% of the GDP. (I do care if it is more than 50% of GDP). We are a democracy and we should be able to come to a consensus. Once we have established that, we need to go about collecting revenue from the people.

    c. Regarding taxation policy, there is always a lot of noise for higher tax rates. Frankly higher tax rates are good from income distribution aspect and not from revenue collection aspect. In the last 60 years, the highest tax rate in US has ranged from 28% to 70%, but revenue collected as part of GDP has always been in the range of 16-20% of GDP. The economic cycle plays a bigger role rather than higher tax rates. Also Tax Foundation table

    d. However higher tax rates does play a role in reducing economic output. For instance, a person earning $500,000 marries somebody earning $60,000. Because they are in the higher tax rate, the person earning $60,000 gets only $30,000 in hand. (35% of federal income tax, 5.3% of state income tax, 7.7% of FICA). If they have 1 child, it makes complete sense for the lower earning person to stay at home because day care costs are at least $20-$25,000 per year. There are other good reasons for staying at home but they need not be considered because the economic reason alone is sufficient. Now the higher tax rate is not getting us any revenue but lowering employment of 1 person. If 3 such people were working, a 4th job is created at the day care center.

    e. According to the attached IRS data, the average income tax paid by the Bottom 50% of the tax filers is 2.6% and the average income tax paid by Top 1% is 23.3%. The average for all tax payers is 12.2%. If that is the case why do we have highest tax rate of 35%. It only creates an army of accountants and lawyers, whose sole purpose is reducing taxes. I am sure their talents can be used better. It also creates a GE-like situation where the top corporate rate is 35% but a company earning $14 Bn is getting a tax refund.

    f. Another major flaw of the current taxation policy is that 33% of the tax returns have zero tax liability or even get money back from the Federal government. Another statistic is that top 1% of the tax filers pay 40% of the taxes and the bottom 95% pay 40% of the taxes. It is not sustainable democracy if a country gets into such a trap. Also incomes of the top 1% are very volatile and will reduce dramatically in case of recession leading to big budget deficits. Just look at NY and CA, that get more than 50% of their revenue from 1% of the tax filers and in recession, they have to lay off thousands of employees and cut services. Again this is not a sustainable form of governance.

    g. Once we set up a system in which most people contribute something to the government then the demand for services from the government will reduce. Also when it comes to higher taxes, it is easy to ask somebody else to pay but difficult for one to pay. For instance in November 2000, 45% of the MA electorate voted to keep the tax rate at 5.85%. Today MA has a flat income tax of 5.3%, but filers can choose to pay a higher rate of 5.85%. Out of the 2 Mn tax returns that Massachusetts residents have filed so far in 2011, only 862 returns with an average annual income of $20,000 have filed at the higher rate. Had the 45% of the electorate that voted for the higher tax paid the higher rate, then we probably would not have had a budget issues in MA today.
    Attached Files Attached Files

Tags for this Thread

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •