Tuesday, February 5, 2008

Biased Opinion - Taxes

So, it is political season, and it is starting to hit Virginia in earnest. Campaign ads are all over the television and radio, we have gotten campaign calls pretty much every day for a while now and so on. And, of course, I watched the candidates lie a lot.

If you didn't gather this before, in my my day job I work for a federal agency as a fiscal law attorney. Most people look at me when I tell them that with this puzzled look on their face wondering what the heck that means. Basically, my job is to advise people who I work with concerning the legalities of spending that portion of federal money allocated to our agency. I also look at the budget when it is being developed in order to see if there is anything we need to know about ahead of time, or think we need to ask Congress to change for various reasons. Although not strictly necessary for my job, this has also given me some contact with the tax code that brings the revenue in to the government.

Knowing this, I am never surprised when candidates for federal office display a shocking ignorance of the federal budget when they talk about what they intend to do in office. When people running for Congress or the Senate for the first time do this, I usually excuse it and figure they might learn if and when they get there. But when candidates for the nomination for President, who have served in the Congress and are touting their experience or their skill in managing legislation do this, I worry. It comes down to this: Passing the various appropriations bills is almost always the most important thing that Congress accomplishes in most years. In some years it is the only important thing Congress accomplishes.

More often, I worry about silly tax code pronouncements. Usually they talk about providing a "middle-class tax cut", because that sounds nice and egalitarian, and everyone pretty much universally thinks it is a good idea (because the vast majority of people in the country think that they are middle-class, and any middle-class tax cut will, by definition, apply to them). The problem is that such pronouncements are usually little more than lies.

The problem is that for just about any income tax cut, the bulk of the benefits will go to the very highest income earners, almost by default. The secret to income taxes in this country is that the wealthy pay almost all of them. The top 50% of income earners pay about 97% of the income taxes. The top 5% of income earners pay about 57% of the income taxes. The top 1% of income earners pay about 37% of the income taxes. Even if you define "middle-class" as being income earners between the 50th percentile and the 95th percentile, they only pay about 40% of the total income taxes paid. This reality makes it very difficult to create a tax cut that doesn't end up with most of the benefits accruing to the top of the income barrel - because that's where most of the money comes from. This, of course, gets people up in arms about how the tax cuts which were sold as being for the middle-class have ended up in the hands of the wealthy.

Now, this isn't a call for reducing taxes on the "wealthy", and I am not making any assessment as to how much taxes should be overall. But the reality is that after deductions and adjustments, the typical middle-class family probably only pays 4-5% of their income in income taxes as it is. There just aren't a lot of ways to drive that number down. If a politician was really serious about a middle-class tax cut, he'd look at some of the other taxes everyone pays, taxes that hit middle-class (and lower-class) individuals harder than their wealthy counterparts. The social security tax is "capped", meaning that if you make a lot of money, there comes a point where you can stop paying more into the system. The social security tax is also about 6% paid by the employee and 6% "paid" by the employer (and the reality is that the employee effectively pays the tax, he just doesn't know it), which is a much higher rate than most people end up paying in income taxes. That would be a place that the burden could be shifted "up" and the burden placed more squarely on higher income earners. It would also be a perfect place to reduce taxes on the middle-class. Of course, it would be political suicide for anyone to propose this - social security is called the third rail of American politics for a reason.

The federal government also taxes a lot of things directly at the point of sale as excise taxes. The most obvious is gas - every gallon of gas sold nets the government 18 cents (24 cents for every gallon of diesel sold). This is a lot more per gallon than the oil companies make in profit on that same gas. While the income tax is designed to be progressive, an excise tax like this is regressive - in other words, it hits those with lower income more, since it is a flat amount of money that has to be paid any time a gallon of gas is purchased. Any politician that was truly serious about reducing the tax burden on the middle-class would reduce the gas tax. Although they are taxes imposed by the states, the various sales taxes are also regressive - if a presidential candidate came up with a way to reduce the burden these sales taxes impose I would be impressed (on the converse, I was amazed when Clinton proposed a national value added tax, a hugely regressive type of tax; the proposal was, thankfully, widely ridiculed, and soundly rejected). Property taxes are also imposed by the states, and mostly hit middle-class homeowners, although you can take a credit on your income taxes.

So, the upshot of my rambling is that I have yet to see a candidate who actually has proposed any kind of tax system that will change the tax burden on the middle-class in a meaningful way. Ever. In any election. As long as they keep tinkering with the income tax system as their exclusive playing field, I don't think anyone ever will.

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Monday, February 4, 2008

Random Thought - Superbowl Sunday

So we watched the Superbowl today. I didn't really care who won, and I've never been one of those guys who can watch football for its own sake. My father can watch football all weekend, no matter who is playing, no matter if he cares who wins or not. Often, he is just hoping to see a "good game", which really means a "close game". I just can't. A game between two teams I don't care about is usually pretty much boring as far as I am concerned. So why did I sit down with my family, tune the TV to the Superbowl, and leave it on all the way through?

I suppose people do it for the commercials, and this year some of the commercials were funny, but that's probably not enough. Mostly, we did it because it was an excuse to have friends over, cook a bunch of food that was unhealthy, and talk all evening. Shrimp, sausage, and chicken gumbo, homemade dip, and homemade doughnuts were on the menu. Our neighbors are Giants fans, and my son's teacher is too (so he was pulling for them too), but we mostly ignored the game and did other stuff.

So why is it that we, like so many other people, need an excuse to get together with neighbors and friends and do sociable things together? Why is it that we only have parties around holidays like Christmas and New Year's, or the Superbowl? Why do we never just say "Hey, let's have a party next week"? I don't know. Maybe we should change that.

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Sunday, February 3, 2008

Getting Started

Well, this is my first entry here. I predict that over time having a blog will be a headache and a burden. I'll suffer from writer's block. I'll probably post things I wish I hadn't. To top it off, almost nobody will probably ever read this.

So, why am I bothering?

Mostly to push myself to actually do what I've said I wanted to do for several years.

I have been a speculative fiction fan for most of my life. Science-fiction, fantasy, alternate history, historical fiction, and so on have always been on my bookshelf. That's not the limit of my interests though - I have books on politics, classics, books about law, history, and science piled up too. I go through books at a rapid pace - and there is always something else I want to read.

But I have always wanted to write myself. So, the basic thrust of this blog will be me keeping a record of my attempts to put thoughts on paper and get them published while balancing those efforts with my family and my work. I read that Stephen King once advised someone who asked him how to be a writer that he should "read five hours a day, and write five hours a day". I don't think I can hope to do either of those right now, but if I can aim to do each two hours a day, I think that would be a start.

"I cannot live without books" - Thomas Jefferson