70 percent tax on work

[Duchess Jack]

They are not interested in a hand up, they'd rather give handouts with their feet firmly planted on their voters heads to insure the cycle continues.

how is this about handouts?

[yo mama]

Anybody stupid enough to have two kids with combined income of $24K is gonna take the cash every time. Just sayin'...

Yeah, there's that.

[Jimmy Neutron]

http://www.cbo.gov/ftpdocs/106xx/doc10642/...ucus_letter.pdf

 

Encouraing news... tempered by the historical fact that large programs like this end up costing much more that projected at conception.

[yo mama]

how is this about handouts?

Because its giving someone something at less than fair market value, with taxpayers covering the difference.

 

However, I'd like to see the program different: for many, anyways. Ever been chronically sick, or had a sick kid but no health insurance? You have to take a lot of time off work, which makes it hard to advance economically. A healthy work force is a more productive work force, and the more productive people become the greater the percentage of their own health care costs they'd be required to pay for themselves. Viewed from that perspective the program will help some people to help themselves, which is generally the Christian thing to do (or whatever dogmatic principles you subscribe to).

[gbpfan1231]

it's a GREAT deal for the family of four with income of $24k with no ambition to move any higher. it's a crappy deal for the family of four who earns $24K but wants to improve their station, because let's say they want to double their income by, say -- getting another job, working more hours, getting a promotion, sending another family member into the workplace, or some combination thereof -- a hugh portion of the fruit of that labor goes straight to the government. why on earth would anyone take a second job to get their family out of poverty when that $8 an hour job nets them $1.50 an hour in extra after-tax income? and how the f*ck is it that none of you on the left seem to see this as any sort of problem whatsover? hey, we're helping the poor, 'nuff said.

 

and by the way, I think perhaps you can stop blasting me for not providing the intricacies of that 70-80%, because it's all explicitly spelled out in that original "dishonest" article I linked to. here it is for you again:

 

 

 

so the baucus plan phase-out takes 30 cents of every dollar, the EITC phase-out takes 21 cents, federal income tax takes 15 cents, and payroll taxes take 8 cents. that doesn't even count food stamp phaseouts, housing vouchers, and other federal assistance that a family at 200% of the poverty level in income either can't qualify for or qualifies at some phased out amount.

 

it would appear that getting out of poverty into the middle class is already steeply taxed at close to 50%, but the baucus bill will make a bad situation in that regard seriously worse -- adding an additional 30%. that is grotesque. it is a poverty trap, that does nothing but perpetuate an ugly dependency. and you're here defending it, while accusing ME of being knee-jerk. wow.

Yo Mama - The point Az is making is: someone who makes 24k will not try to get themselves out of poverty by working if the fruits of their labor only give back 20-30%. Would you? That is all Az is saying and I don't see anywhere where you challenge that. These people will continue to just sit back and make the 24k and still get the money for insurance and then who is left to pay for this?

 

Come on let's here what you say about what Az is really trying to ask.

[yo mama]

Yo Mama - The point Az is making is: someone who makes 24k will not try to get themselves out of poverty by working if the fruits of their labor only give back 20-30%. Would you? That is all Az is saying and I don't see anywhere where you challenge that. These people will continue to just sit back and make the 24k and still get the money for insurance and then who is left to pay for this?

 

Come on let's here what you say about what Az is really trying to ask.

Normal people don't want to go from $24k to $48k and stop there. Normal people want to earn $100k or more. And once you get past that $48k threshold things start to even out just fine. Some people might choose to stay at the $24k level forever. Those people are stupid: if poverty did not motivate them to earn more money tax policy most certainly will not. On the other hand, rational actors will want to earn as much as they can, and asking them to contribute more as they earn more is both fiscally responsible and fair to others. Making sure those rational actors and their families are healthy and at work will help them be better wage earners and better taxpayers. Eventually the rest of us will not be subsidizing the health care costs of the rational actors because they will be paying for themselves. But we will ALWAYS be subsidizing the health care cost of people who choose not to make more than $24k, in one form or another, regardless of whether we give them health insurance.

 

Now, pull back for a second and look at the big picture. Az' theory is essentially that *some* people might choose to stay poor. Normal people don't choose to remain poor. Should we deny public health care to everyone making less than $48k based on that kind of speculation? Frankly, I'd have more respect for someone who said "screw the poor, they're not my problem" rather than trying to rationalize the denial of public health for those most in need based on some myopic, pretextual tax fairness bullmanure.

Edited October 9, 2009 by yo mama

[bpwallace49]

Frankly, I'd have more respect for someone who said "screw the poor, they're not my problem"

 

Isnt that what Perch does?

 

God bless that little rascal . . . .

[Azazello1313]

Normal people don't want to go from $24k to $48k and stop there. Normal people want to earn $100k or more. And once you get past that $48k threshold things start to even out just fine. Some people might choose to stay at the $24k level forever. Those people are stupid: if poverty did not motivate them to earn more money tax policy most certainly will not. On the other hand, rational actors will want to earn as much as they can, and asking them to contribute more as they earn more is both fiscally responsible and fair to others. Making sure those rational actors and their families are healthy and at work will help them be better wage earners and better taxpayers. Eventually the rest of us will not be subsidizing the health care costs of the rational actors because they will be paying for themselves. But we will ALWAYS be subsidizing the health care cost of people who choose not to make more than $24k, in one form or another, regardless of whether we give them health insurance.

 

Now, pull back for a second and look at the big picture. Az' theory is essentially that *some* people might choose to stay poor. Normal people don't choose to remain poor. Should we deny public health care to everyone making less than $48k based on that kind of speculation? Frankly, I'd have more respect for someone who said "screw the poor, they're not my problem" rather than trying to rationalize the denial of public health for those most in need based on some myopic, pretextual tax fairness bullmanure.

 

right because people at the poverty level just decide to start making "$100k or more" one day.

 

I know you want to make this about who really cares more about poor people, because, well, that's the kind of thing people do when logic fails them.

 

this is a real simple matter of incentives. if the government makes it more comfortable to live at the poverty level, and makes it much harder to get to the next rung of the ladder through perverse tax incentives, well, I think it is safe to predict that a large number of people will respond to those incentives. if a family with $48k in income only takes home $7k more per year than a family with $24k in income, it's just not going to be worth it most of the time. again, why on earth would anyone take a second job to get their family out of poverty when that $8 an hour job nets them $1.50 an hour in extra after-tax income? that barely pays for gas and lunch at mcdonald's in their half hour break. why would anyone work hard to get that assistant manager promotion of 4 bucks an hour, when for all the added effort, responsibility and hours they actually only get 50 cents an hour, 20 bucks a week? it's all too smug and easy to sit back and say, well if they were "normal" and had any self-respect or work ethic, they wouldn't be satisfied being poor. they'd pull themselves up by their bootstraps, even if the government DOES take 80% of their income as they struggle to get out of poverty! but that is not reality, at least not for most. look around you. there are millions of people in this country who already don't have much initiative to get beyond what we currently define as poverty. add an extra 30% surcharge on that kind of effort, while also making it that much cozier to stay put....well, pretty obvious the effect that will have.

[bpwallace49]

if the government makes it more comfortable to live at the poverty level, .

 

. . . because when I think poverty level . . . I think "comfortable" . . .

[CaP'N GRuNGe]

more on the Baucus bill

[WaterMan]

Also, the U.S. is pretty much the only nation in the world that advertises to the general populous with commercials about what "might" be wrong with you. Kind of sad that the market society is peddling drugs in the mainstream.

 

The drug lobbiest are strong. But don't be surprised when they turn on our younger generations to non prescription drugs.

[Perchoutofwater]

'Conceptual Language' Hides Health Care's Costs

A Commentary By Michael Barone

Monday, October 12, 2009

 

Some of the headlines in recent days are not worthy of belief. No, I'm not referring to the headlines that Barack Obama won the Nobel Peace Prize, however odd that many seem to many (including, it seems, Obama himself). I'm referring to the headlines earlier in the week to the effect that the health care bill sponsored by Senate Finance Committee Chairman Max Baucus will cut the federal deficit by $81 billion over the next 10 years.

 

Yes, that is what the Congressional Budget Office estimated. But, as the CBO noted, there's no actual Baucus bill, just some "conceptual language." Actual language, CBO noted, might result in "significant changes" in its estimates. No wonder Democratic congressional leaders killed requirements that the actual language be posted on the Internet for 72 hours before Congress votes.

 

More significant is the number most publications did not put in their headlines and lead paragraphs: CBO's estimate that the Baucus "conceptual language" would increase federal spending by $829 billion over 10 years. So how do you increase federal spending and cut the deficit at the same time?

 

One way is taxes. The Baucus conceptual language includes a tax on high-cost insurance plans ($210 billion), penalties for not having insurance ($27 billion) and "indirect offsets" (whatever they are -- $83 billion).

 

In addition, costs are fobbed off on state governments in the form of more Medicaid spending, and savings are projected from future reductions in Medicare that will surely turn out to be imaginary (Congresses of both parties have acted to prevent such reductions every year since 2003).

 

We know from past experience that cost estimates of all government health care programs (except the 2003 Medicare Part D prescription drug benefit, which has private market competition) tend to understate actual costs. So the Baucus bill -- er, conceptual language -- if enacted is likely to expand government spending by more than the estimated $829 billion.

 

And perhaps quite a bit more. The Baucus measure enables families without employer-provided insurance to obtain it at exchanges with subsidies that make it cost less than what those with employer-provided insurance pay. The latter are a majority of voters -- how long are their elected representatives going to let this disadvantage stand?

 

The Baucus measure subsidizes low-income families. Say you make $48,000 a year and get a $900 subsidy. As your income rises, this subsidy would be phased out, raising your effective marginal tax rate to as much as 70 percent. How long will Congress let this stand?

 

And perhaps even more. The Wall Street Journal's Kimberley Strassel points out that well-placed senators are getting special favors in the bill. Majority Leader Harry Reid gets the feds to pick up Nevada's extra Medicaid spending. Charles Schumer gets many high-cost insurance plans in New York exempted from tax. How long before other members seek similar breaks for their states?

 

The Baucus bill attempts to force more Americans to buy health insurance policies designed according to government specifications, which means they will be very expensive and consumers will be shielded from costs. But that's likely to produce an increased demand for health care procedures and bend the cost curve not downward but upward.

 

Market incentives like those in Part D that might shift it downward are pretty much absent from the Baucus bill. All this will still, according to CBO, leave 25 million Americans without health insurance.

 

CBO estimaters are constrained by budget rules from guesstimating how costs will skyrocket because of political pressures. The rest of us are not. We can regard CBO's estimate of $829 billion in additional spending not as a ceiling but as a floor.

 

We can reasonably conclude that the Baucus bill -- or whatever similar measure Reid and Schumer concoct -- would vastly and permanently increase public sector spending and impose a crushing burden on the private sector in a weak economy. That burden would be particularly heavy on low earners forced to buy expensive policies or else pay stiff fines, with money they would otherwise receive as wages or salaries.

 

There are no good public policy reasons to pass such a bill hurriedly and before it can be fully analyzed and debated. Only political reasons: line up enough Democratic members before they can process the public opinion polls that show most voters hostile to such measures and before they are faced with probable though not certain Democratic defeats in Virginia and New Jersey in November.

 

Too bad the Nobel committee doesn't have a vote.

 

Michael Barone is a senior political analyst for The Washington Examiner.

 

COPYRIGHT 2009 THE WASHINGTON EXAMINER

[Azazello1313]

great op-ed on this in this weekend's new york times:

 

Supply-Side Ideas, Turned Upside Down

By N. GREGORY MANKIW

Published: October 31, 2009

 

BARACK OBAMA is, in many ways, the left’s answer to Ronald Reagan.

 

Both came to office as charismatic and self-confident leaders, elected in times of economic crisis and determined to move the economy in a new direction. What is less obvious, however, is that the signature domestic issue in President Obama’s first year in office — health care reform — is shaping up to be the antithesis of President Reagan’s supply-side economics.

 

The starting point for Ronald Reagan was the idea that people respond to incentives. The incentives that he most worried about were those provided by the tax system. According to his budget director, David A. Stockman, Mr. Reagan would regale the staff with stories of how he, as an actor, used to alter his work schedule in response to the tax code.

 

“You could only make four pictures, and then you were in the top bracket,” Mr. Reagan would say. “So we all quit working after four pictures and went off to the country.”

 

The key economic concept here is the marginal tax rate, which measures the percentage of a family’s incremental income to which the government lays claim. During Mr. Reagan’s time in office, the top marginal tax rate on earned income fell to 28 percent from 50 percent.

 

The verdict on supply-side economics is mixed. The most striking claim associated with the theory — that cuts in marginal rates could generate so much extra work effort that tax revenue would rise — is unlikely to apply except in extreme cases. But substantial evidence supports the more modest proposition that high marginal tax rates discourage people from working to their full potential. Mr. Reagan’s behavior as a movie actor is a case in point.

 

President Obama has said he wants to raise marginal tax rates on high-income taxpayers. Yet under his policies, the largest increases in marginal tax rates may well apply not to the rich but to millions of middle-class families. These increases would not show up explicitly in the tax code but, rather, implicitly as part of health care reform.

 

The bill that recently came out of the Senate Finance Committee illustrates the problem. Under the proposed legislation, Americans would have the opportunity to buy health insurance through government-run exchanges. Depending on a family’s income, premiums and cost-sharing expenses, like co-payments and deductibles, would be subsidized to make health care more affordable.

 

A family of four with an income, say, of $54,000 would pay $9,900 for health care. That covers only about half the actual cost. Uncle Sam would pick up the rest.

 

Now suppose that the same family earns an additional $12,000 by, for example, having the primary earner work overtime or sending a secondary worker into the labor force. In that case, the federal subsidy shrinks, so the family’s cost of health care rises to $12,700.

 

In other words, $2,800 of the $12,000 of extra income, or 23 percent, would be effectively taxed away by the government’s new health care system.

 

That implicit marginal tax rate of 23 percent is a significant disincentive. And it comes on top of the explicit marginal tax rate the family already faces from income and payroll taxes. Altogether, many families would face marginal rates at or above the 50 percent level that animated the Reagan supply-side revolution.

 

One might hope that such a large climb in marginal rates is a bug in the Senate Finance bill, one that could be fixed before the legislation became law. But there is no simple fix. Higher marginal tax rates are an integral part of the Obama health plan.

 

Here’s why:

 

Health reformers start with the problem that some people are expensive to insure, because of pre-existing health conditions. Their solution is to require insurers to sell insurance to everyone (a policy called guaranteed issue) at the same price (called community rating).

 

This solution, however, causes another problem. For healthy people, insurance is now a bad bet. A person without significant medical needs has an incentive to wait — to buy insurance later if and when he gets sick, a decision that raises the cost of insurance for everyone else. This problem, according to the reformers, calls for another solution: a mandate requiring people to buy health insurance.

 

But this mandate leads to yet another problem. Requiring an expensive purchase like health insurance can be onerous for low-income families. So the health reformers offer subsidies.

 

Which brings us back to marginal tax rates. If large health insurance subsidies were offered to all Americans, regardless of income, the program’s cost would be exorbitant, requiring substantial increases in explicit taxes. So, instead, the subsidies are phased out as income rises. As a result, we get implicit marginal rates like those in the Senate Finance bill.

 

NONE of this necessarily means that health reform is not worth doing. President Obama’s push for reform is premised on the belief that access to good health care should be a right of all Americans — a proposition better judged by political philosophers than economists.

 

But we should not forget the cost of translating that noble aspiration into practical policy. As a matter of economic logic, President Obama’s goal of universal health insurance cannot help but undermine former President Reagan’s goal of lower marginal tax rates. Future generations of Americans may find health insurance more affordable, but they will also find hard work less financially rewarding.

 

here are the CBO numbers on which the article is based

 

the implicit marginal tax rates are even higher in the house version

[wiegie]

I think the obvious solution is for the government to provide "matching" funds for people's incomes. And the percentage of the "match" could increase as people's incomes go up.

 

This way people will have a very strong incentive to work hard to increase their incomes.

[yo mama]

It's like deja vu all over again. And again. And again.

 

While I do not support the current health care proposals, speculating that the poor will act like movie stars if they get basic health care is laughable. *If* Ronald Regan stopped working after his fourth film each year it was because he didn't need the money. Poor people, by definition, don't have that problem.

[Beaumont]

It's like deja vu all over again. And again. And again.

 

While I do not support the current health care proposals, speculating that the poor will act like movie stars if they get basic health care is laughable. *If* Ronald Regan stopped working after his fourth film each year it was because he didn't need the money. Poor people, by definition, don't have that problem.

 

You are doing some excellent work in this thread. I am not sure they are listening.

[Azazello1313]

It's like deja vu all over again. And again. And again.

 

While I do not support the current health care proposals, speculating that the poor will act like movie stars if they get basic health care is laughable. *If* Ronald Regan stopped working after his fourth film each year it was because he didn't need the money. Poor people, by definition, don't have that problem.

 

is it really such a stretch to think that people respond to incentives? where exactly does mankiw have it wrong?

 

and again, it has nothing to do with acting like a movie star. what middle class family is going to send a second breadwinner into the workplace if they get to keep a whopping 30 cents of every dollar s/he earns? what working stiff is going to take a second $10/hour job if they get to keep 12 bucks after a four hour shift? people respond to incentives, whether they are relatively rich movie stars or just someone doing their best to scrape by.

Edited November 4, 2009 by Azazello1313

[Yukon Cornelius]

is it really such a stretch to think that people respond to incentives? where exactly does mankiw have it wrong?

 

and again, it has nothing to do with acting like a movie star. what middle class family is going to send a second breadwinner into the workplace if they get to keep a whopping 30 cents of every dollar s/he earns? what working stiff is going to take a second $10/hour job if they get to keep 12 bucks after a four hour shift? people respond to incentives, whether they are relatively rich movie stars or just someone doing their best to scrape by.

would it be so bad if one of the parents did stay home with the kids. Since 1980 the decline of parent involvement is well documented as are the problems it has caused.

[Perchoutofwater]

is it really such a stretch to think that people respond to incentives? where exactly does mankiw have it wrong?

 

He and the rest of the left know good and well that people respond to incentives, that is the reason our tax code is so screwed up, and why we get deductions for this that and the other. If people didn't respond to incentives, there would be no reason to offer a tax credit for new more energy efficient HVAC systems or windows. The government currently tries to control our behavior by incentives and disincentives in the tax code, and anyone that argues otherwise is blind.

[TimC]

would it be so bad if one of the parents did stay home with the kids. Since 1980 the decline of parent involvement is well documented as are the problems it has caused.

 

We should have laws that if both parents are working and you are cranking out babies, you be charged with child abuse. Especially if you are making less than $24,000 a year.

[Yukon Cornelius]

We should have laws that if both parents are working and you are cranking out babies, you be charged with child abuse. Especially if you are making less than $24,000 a year.

im all for that but will not fly with the Catholicism

[WaterMan]

would it be so bad if one of the parents did stay home with the kids. Since 1980 the decline of parent involvement is well documented as are the problems it has caused.

 

No you got it all wrong Yukon. It's all because prayer was taken out of State run schools.

[WaterMan]

I personally don't know anyone who wants to be poor. If given the chance at a better wage, anyone would jump at it.

[gbpfan1231]

I personally don't know anyone who wants to be poor. If given the chance at a better wage, anyone would jump at it.

That may be the funniest thing I have ever read.

[caddyman]

That may be the funniest thing I have ever read.

You must be new here. He is full of those.