Breaking News: The Rich Get Richer While The Rest of Us Get Squeezed. Oh. Wait.

Categories: Get Off My Lawn

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David Cay Johnston, author of the best-seller Free Lunch, has a great piece out this week called "9 Things the Rich Don't Want You to Know About Taxes," providing powerful evidence that middle and working class Americans are being played for suckers and dupes by the plutocrats in this country. It's something I have written about here before,
my argument being that we can't even begin to comprehend the government funding crisis or the general erosion of public life in Dallas and Texas until we understand the bigger picture Johnston so ably paints in his piece.

None of this terrific squeezing of the middle and lower economic echelons is an accident. None of it is a response to "natural" economic factors or conditions. And none of it is good for the country.

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In his story, which I urge you to read, Johnston starts out by presenting stark hard-number evidence that the Republican supply-side voodoo has been bad for America. Reagan put us in debt and ran down the economy. It was Bill Clinton who pulled us out and put us on a better road by restoring simple equity to the tax structure.

Johnston does a great job knocking down the Fox TV just-for-morons argument that poor people don't pay taxes. He shows that poor and middle class people pay more in taxes than the super-rich, who are getting the only free ride most of the time.

It's a very important window on the most important reality around us today -- a squeeze play that's taking mid-century America, a prosperous global democratic giant, and turning it into a crappy run-down 21st century banana republic ruled by rich people grown stupid on their own arrogance.

Take a look. I'm going canoeing, and if I see any rich people out there I'm going to thwock them with my paddle. Unless I'm canoeing with them. That would be untoward of me. In that case, I may just try to borrow money.


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36 comments
Mike3647
Mike3647

I thought this blog was supposed to be about Dallas. Why don't you go work for the daily kos or huffpo? Enough already.

US_Lab_Rat
US_Lab_Rat

So where are all the jobs from the Bush tax cuts?

Didn't American LOSE jobs AFTER the Bush tax cuts?

I know some here think they can ignore the elephant in the room but really... there are more people competing for LESS JOBS and those jobs are LOWER PAYING JOBS.

Poor paying more, flat taxes, fair tax are just conservative Republican political cons and shell games.

DISD Teacher
DISD Teacher

JIm, you are a wonderful writer.

Now if you'll just do a piece on how middle class taxpayers are being squeezed to support a bloated layer of nonessential, actually-detrimental administrators and educrats, I will finish building the shrine to you in my house.

(See related Unfair Park piece on how less than 35 of the over-700 employees of DISD who took the buy-out are non-campus personnel--the non-campus people have a good, overpaid gig and they're not letting go of it).

Soaking the rich won't help if we don't make sure the money goes to the right places. Hinojosa makes well over $350K. For a failing district. Thanks to our school board.

Phelps
Phelps

Oh, and careful with the SS cutoff stuff. Capping payments in makes sense when payments are also capped going out when you retire. If you start taxing all the income, then people are going to realize that it's setup as a tax and welfare program, not the world's most fraudulent retirement program.

Phelps
Phelps

(Unintentional double post. Stupid login system)

Phelps
Phelps

It was Bill Clinton who pulled us out and put us on a better road by restoring simple equity to the tax structure.

You realize that a progressive tax schedule is inequitable by definition, right?

Rderrickwhite
Rderrickwhite

I can't believe how smug some of these comments are. Are there specific statistics in that article being disagreed with, or just a general disdain for information that can’t be broken down into a sound bite? When you look at taxes paid in aggregate (and after the consideration of tax incentives) wealthy Americans pay far less than those of us who aren’t. The math, unlike our tax code, is relatively simple. The tables in the article were easy to follow. Furthermore, tax credits are terrible public policy, regardless of who they benefit. There are only two ways that cutting top line revenue can improve a bottom line result. 1) cutting expenses. 2) gaining a massive economy of scale. Option one is appropriate in cases where there is massive waste – but look at the data in the article. Have we been trimming the fat or have we been marginalizing the majority of America? Option two is fantastic. It’s what everyone should want. The economy grows at such a massive scale that it’s velocity means that the government can pass on savings by lowering the tax rate. Having said that, does that scenario seem likely to anyone reading this? If neither scenario seems rational, then the only option left is to revise the tax code in such a way that revenue, profit, or both grow. There are ways of achieving that end that does not involve a flat tax.

Steve
Steve

Here you go Jim, for you and all of your buds who think the answer to everything is giving government and the idiot politicians who run it more money, knock yourselves out - https://www.pay.gov/paygov/for...

Jay Hawk
Jay Hawk

Both parties are controlled by rich people who don't want to pay taxes. And the Koch brothers pull the strings on the Tea Party, so they're now 3-for-3.Yay America!

locoDbag
locoDbag

The poorer amongst us already pay a heaping amount of their paycheck to taxes when renting, paying for groceries,gas(if they can even afford a car), and buying personal articles (like clothing,etc). How could everyone pay a flat tax rate and this country still operate? How does someone making $30,000 or less survive when the wealthy want the government to reduce programs i.e. ss, medicare, public education? If the wealth owners want there to be a flat tax where the middle and poorer within the population can still have their needs met, then ,they will have to start paying more in wages (a livable one) and then we might be able to talk. Till then it just sounds like one group wishes to hoard.

Steve
Steve

Great work Jim, i haven't heard these super secret things about the evil rich since this time last year, and the year before that and the year before that and so on.

Howlshasa
Howlshasa

Are you capable of writing anything in a way that doesn't come off as a shrill little girl? Or do you actually believe that your point of view comes across more effectively when you write like an unhinged ideologue who believes anyone with a differing perspective is evil and/or moronic? Now having said all that, have fun canoeing. Seriously. I'm an avid practitioner advocate of canoeing.

Dallas_Joe_Schmo
Dallas_Joe_Schmo

I'm definitely a "conservative" and a "republican" so I take issue with the blame heaped on the Presidents. First of all, Congress passes spending bills, not the president. I might add that for a majority of both Reagan's and GW's terms, dems controlled the house and the Senate. While during, Bubba's time, Republican's did. Anyone with any intelligence, including you Jim, should know that Congress is the one that passes spending and taxing issues. While presidents may try to lead, they usually go along grudingly.

As for the fix, it's simple. Elminate all brackets, loopholes, deductions, credits etc and create a flat tax system where everyone pays the same rate on the money they make that year. Essentially you'd be taxing the transfer of money from one entity to another. Let Congress debate how the money is spent each year. Want more money for education, add up how much there'll be and figure out how much you want to spend. Same goes for medicare benefits and SS.

I guarantee the Govt will take in so much money that you won't have to tax anyone making less than $75,000.

David Swinney
David Swinney

Bill Clinton also signed off on the repeal of the Glass-Steagall Act, and there are many knowledgeable people (moreso than I am, for certain) who believe that its removal was a fundamental component to the financial meltdown of 2008 and subsequent recession.

It's not as simple a picture as you would like to paint, Jim.

This is a bipartisan problem.

Uppercase Matt
Uppercase Matt

"Actually, they [50 percent of the country] pay lots of taxes—just not lots of federal income taxes. ... Social Security, Medicare and unemployment insurance taxes (known as payroll taxes) are paid mostly by the bottom 90 percent of wage earners."

Here's some "simple equity" to the tax code. End Social Security, Medicare, and unemployment, and any taxes that support them. Have a flat income tax, while eliminating deductions and write-offs. Everyone pays the same rate to support federal spending.

What could be fairer?

Rderrickwhite
Rderrickwhite

Dallas is an ideal microcosm for this entire discussion

BoHan
BoHan

I'm thinking maybe you haven't looked at the salaries of the Dallas Morning News' chief executives. Because that is a success story of failure, and they are raking it in. So quit looking at public servants in a vacuum.

scottindallas
scottindallas

Ok, but considering that the big income tax payers have been stealing from the SS funds for so long, isn't it only fair that the rate come uncapped. If pay off the debt, and then can segregate those funds and get SS self-sustaining. Then, we can consider cutting that rate down. As is, over 20% of the national debt is held by SSI.

scottindallas
scottindallas

no it is not, it is essential to achieving flat taxation rates. The rich are harder to tax. Their effective tax rate has been around 22% for ever. Currently, they are paying an effective 18% tax rate. The taxation level achieved and tax rate are vastly different.

Phelps, quit listening to idiots. Listen to Ed Wallace on Saturday from 8-1 on KLIF 570. He is business friendly and actually does due diligence. Listen to him, call him, I'll be listening. Is website isn't half bad either, kind of a Dallas centric Drudge. www.insideautomotive.com Ed's show is "Wheels" it focuses on cars, Americana, current events and manufacturing news. Seriously, Check it out.

thefncrow
thefncrow

You're incorrect. While a progressive tax schedule can be inequitable, any tax schedule short of a progressive tax schedule is inequitable by definition, thanks to the diminishing marginal utility of money.

The only way to establish an equitable tax schedule is via a progressive tax schedule.

thefncrow
thefncrow

Even if wages were significantly raised, a nominally flat tax would still impose a greater burden on the poor than it would the rich. If this doesn't make sense, look up the concept of "diminishing marginal utility", which is such a basic principle of economics that it's typically the first thing taught on day 1 of any introductory economics course.

In short, "diminishing marginal utility" means the value of a dollar is not constant. $1 has a different value to individuals based on how much money they already have. If you're broke and homeless, $1 has a ton of value. If you live in a mansion, $1 has a pathetic amount of value.

As a result, even if you set a flat tax at something like 25% (which is where you'd have to set such a tax to have any hope of actually funding the government), the person who pays $2,000 out of their $8,000 income is hit much harder than the person who pays $200,000 out of their $800,000 income.

Montemalone
Montemalone

Do you think Jonathan Swift is a non-fiction writer, too?

DoubleOJoe
DoubleOJoe

Instead of blaming a single party, we should just blame our elected representatives in general. We're in this fix because of two factors: 1, we let those who don't understand economics set economic policy, and 2, we allow undue influence on said policy by those who benefit most from manipulating it, i.e. large corporations and lobbyists.

No politician who was in Washington for the past 30 years can be absolved of blame, regardless of party.

Guest
Guest

I consider myself a Republican, as well, but I would dispute that the Democrats controlled both the House and the Senate for "most" of Reagan's and GWB's terms.

The Democrats controlled the House during all of Reagan's terms, true, but the Senate was in Republican hands from 1981 until 1987. Only in the final two years of Reagan's terms did the Democrats control both Houses.

During GWB's terms, Republicans controlled the House from the beginning of his first term (having taken it for the first time since 1955 in the 1994 elections) until halfway through his second term (beginning in 2009).

The Senate during GWB's first term was originally 50-50 (with a Republican VP having a tiebreaker vote). In mid-2001 Jim Jeffords switched to the Democratic party, giving Dems control of the Senate, which lasted until 2003 (so, roughly, 18 months). The Democrats regained control in 2009.

So, the Democrats only controlled both Houses of Congress for four years out of the 16 years that make up the Reagan and GWB presidencies.

The Democrats did control at least one chamber of the Congress for about 11.5 years of the 16, which is certainly "most", but I don't think it's fair to say they controlled both for most.

(Of course, I think we should also point out, like you did, that the Republicans controlled both Houses of Congress for 6 of the 8 Clinton years, including when the budget was balanced. Of course, the Republican-controlled Congress failed to put through an individual income tax rate cut during that time. It was only after Bush took office and before Jeffords switched parties that individual income tax rates were lowered).

scottindallas
scottindallas

A good an important point. Only by voting third party will the two parties get serious. The 3rd parties never get elected but their issues get co-opted. Only when a true 3rd party arose did we get real reforms. FDR feared the Socialists and Perot made balancing the budget a campaign issue that neither Bush nor Clinton were interested in. When these parties see 10-15% on their fringe the party will move to the "extreme" rather than the center. The "tea party" is getting some traction out of the GOP just as the Greens, or even supporting Ron Paul's anti-war, pro-civil rights message will get Democrats to oppose war. I guess Obama is right, "yes WE can." We've got to do it, cause these guys got no spine.

Reality
Reality

Bipartisanship since Reagan = the party of the rich and powerful, and the other party of the rich and powerful. Clinton and Obama = Reagan and Bush(es).

Nachoman
Nachoman

Great idea! Lets kick all of the senior citizens out on the streets. That seems nice and humane.

Social Security and Medicare is for pussies anyways!

scottindallas
scottindallas

Due to fungibility, such a proposal isn't as easily achieved as decreed. I believe it is a good and fair basis to start every discussion with, though can only be achieved with progressive tax rates.

Montemalone
Montemalone

Great idea.80% tax on all incomes over $1,000,000.00.I call that extremely fair.

Jay Hawk
Jay Hawk

Yup - it's city government is controlled by people who aren't eligible to vote in the elections.

scottindallas
scottindallas

We aren't forced to support their endeavor, gov't, and utilities we are forced to support.

scottindallas
scottindallas

your arguments not withstanding, since the rich's money is harder to capture, a progressive rate is necessary to get their contributions near the same percentage as those who derive all their income from an employer. It's about effective taxation. A wage earner is taxed on 100% of his income; the rich, with multiple forms of compensation and sources of income is able to evade many taxes.

Anonymous
Anonymous

actually, that is incorrect about utility. it cannot be compared across individuals. the marginal utility of an extra dollar for the same person is, in theory, higher at the $10k income level relative to the $100k income. but it is incorrect to say that an extra dollar for me is "worth" more than an extra dollar to Donald Trump. that's not how utility comparisons work.

scottindallas
scottindallas

What disturbs me is that there are some venerable lawmakers that had/have been in office for some time and who spoke out against these measures, though they get little press. Bernie Sanders, Feingold, Ron Paul, and a few others have opposed these measures and gotten no press. I really blame the media. I expect craven politicians, though they all aren't, it's sure easy to get frustrated with them. The blame lies with the media and US.

scottindallas
scottindallas

Actually some thought needs to be given to absolute or nominal costs. Many costs in life are essentially fixed, so these hit the rich vastly differently than the poor, or middle, even lower upper classes. It makes no sense to tax/treat someone making $300K to someone making $3M, and if you think about it for a minute, you know it too. One can afford all of life's burdens quite easily, the other MUST plan and borrow. Consider college education for yourself and your kids, utilities, and the like. Also, before you speak too loudly about utilities being higher for the wealthy (some are, some aren't like cable, telephones, car insurance...) their higher use represents a greater burden on the gov't and commons.

And, one other thing. The person making the big bucks doesn't have a boss. If he is a small businessman, as Paul Ryan likes to defend, he can sink boon year income into his business, deferring income into wealth, and consequently either hiring and/or investing in capital goods. So, who else doesn't have bosses, media stars, and corporate executives. Both are not the "owners" they are more like the trustees, that get to govern the prison, the "owners" are like the warden and guards. They don't really mingle with us, they are apart. That's ok too. But they should be encouraged to invest their money in capital improvements. So, in both the case of the entrepreneur and the corporate execs, high tax rate is also the discount given for hiring and investment. Low taxes means there's little discount, or in another word little incentive to hire or invest. Equity is diminished, as it is bled out of these firms into corporate management giddy about their untaxed booty. Consider, every poor person pays the very tax rate (payroll taxes) these plutocrats face, then income taxes hit them; whereas the "investor class" pays only 15% capital gains--the same rate the working class pays in payroll taxes.

I get sick of hearing that the poor pay no "income taxes." It's a marker of sophism, what is "income" if not "payroll?"

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