Are we to dumb to know what is good for us?

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CharlieBob
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Are we to dumb to know what is good for us?

Post by CharlieBob »

http://www.npr.org/blogs/money/2012/07/ ... cians-hate

This is a snippet of a bit NPR did I caught before the election. Essentially they got together a bunch of economists from all political walks and told them to come up with some changes to the current system they could all agree on. The 6 are listed in the above link (and bellow quote). They then hired an actor and tried to get some political advisers to pitch a campaign with the guy using these as a platform. The whole point being these policies, despite being universally accepted by economists and therefore good for our economy (in theory), would never be accepted by the general public and anyone who tried to campaign on them would go no where.

This got me wondering if this was true. While he didn't win Ron Paul ran on several of these policies in his platform and many could argue was successful in raising awareness and garnering nation wide support through a grass roots movement appealing to many more traditional fiscal conservatives (repub and dem) and libertarians. If after this election the repubs reorient around this philosophy in the form of Rand would the public see reason?

I enjoy the diversity of opinion here and with all the post election political discussion I thought I would through this in the hat :)

Tuesday's show presented the common-sense, no-nonsense Planet Money economic plan — backed by economists of all stripes, but probably toxic to any candidate that might endorse it.

You can still listen to the show, but we've had some requests for a post with our six-step plan spelled out in brief.

So here they are, along with a few words about each of the economists who helped craft it:

The proposals
One: Eliminate the mortgage tax deduction, which lets homeowners deduct the interest they pay on their mortgages. Gone. After all, big houses get bigger tax breaks, driving up prices for everyone. Why distort the housing market and subsidize people buying expensive houses?

Two: End the tax deduction companies get for providing health-care to employees. Neither employees nor employers pay taxes on workplace health insurance benefits. That encourages fancier insurance coverage, driving up usage and, therefore, health costs overall. Eliminating the deduction will drive up costs for people with workplace healthcare, but makes the health-care market fairer.

Three: Eliminate the corporate income tax. Completely. If companies reinvest the money into their businesses, that's good. Don't tax companies in an effort to tax rich people.

Four: Eliminate all income and payroll taxes. All of them. For everyone. Taxes discourage whatever you're taxing, but we like income, so why tax it? Payroll taxes discourage creating jobs. Not such a good idea. Instead, impose a consumption tax, designed to be progressive to protect lower-income households.

Five: Tax carbon emissions. Yes, that means higher gasoline prices. It's a kind of consumption tax, and can be structured to make sure it doesn't disproportionately harm lower-income Americans. More, it's taxing something that's bad, which gives people an incentive to stop polluting.

Six: Legalize marijuana. Stop spending so much trying to put pot users and dealers in jail — it costs a lot of money to catch them, prosecute them, and then put them up in jail. Criminalizing drugs also drives drug prices up, making gang leaders rich.

There you have it, six major proposals that have broad agreement, at least among economists. Though we should note that there were some pretty significant quibbles about just how to implement the income-tax and carbon-tax proposals.

The economists
Dean Baker, co-director of the Center for Economic and Policy Research in Washington, D.C., and widely published blo "You could probably describe me as left of center. It'd be fair."

Russ Roberts, George Mason University economics professor. "In the grand spectrum of economic policy, I'm a pretty hard core free market guy. I'm probably called a libertarian."

Katherine Baicker, professor of health economics at Harvard University's Department of Health Policy and Management. We simply called her a centrist on the show.

Luigi Zingales, professor of entrepreneurship and finance and the University of Chicago's Booth School of Business. "What I like to say is that I'm pro-market, but not necessarily pro-business."

Robert Frank, professor of management and economics at Cornell University's Johnson Graduate School of Management. "I'm a registered Democrat. I think of myself as a radical pragmatist."
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Re: Are we to dumb to know what is good for us?

Post by Fat Cat »

"too" dumb, imho
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Re: Are we to dumb to know what is good for us?

Post by Turdacious »

Two: End the tax deduction companies get for providing health-care to employees. Neither employees nor employers pay taxes on workplace health insurance benefits. That encourages fancier insurance coverage, driving up usage and, therefore, health costs overall. Eliminating the deduction will drive up costs for people with workplace healthcare, but makes the health-care market fairer.
A good idea but only in conjunction with others. By itself, eliminating the deduction will not drive up costs for people with workplace healthcare, it will drive up the costs for the employer providing workplace healthcare (the cost sharing breakdown between employers and employees is usually around 2/1 FWIW). By raising employer costs, it will discourage employers from offering health care to their employees. Also, as health care is a largely hidden benefit to employees (there is asymmetric information-- employees don't necessarily value health care provided by employers at the same rate as it costs the employer), there is no guarantee that this would translate to higher wages or increased hiring.
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Re: Are we to dumb to know what is good for us?

Post by Steggy »

Never happen, people talk being fiscal until it is "their" money you start taking from them. Mortgage deduction? Yup, should go and majority paying a mortgage would raise hell. Same with those with a health insurance plan provided by their company. On this one alone the unions would never let it happen.

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Re: Are we to dumb to know what is good for us?

Post by Drew0786 »

I think you will see in the coming weeks Obama's plan to save us from the "financial cliff" will be to eliminate many of the tax deductions people currently claim. Deductions for mortgage, children, giving to charity will be altered or perhaps cut out all together for certain incomes.
This will be spun as a way that government revenue is increased without raising taxes. Never mind there is no plan to cut spending or to grow the economy.
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Re: Are we to dumb to know what is good for us?

Post by Batboy2/75 »

Drew0786 wrote:I think you will see in the coming weeks Obama's plan to save us from the "financial cliff" will be to eliminate many of the tax deductions people currently claim. Deductions for mortgage, children, giving to charity will be altered or perhaps cut out all together for certain incomes.
This will be spun as a way that government revenue is increased without raising taxes. Never mind there is no plan to cut spending or to grow the economy.

Bingo, spending isn't going down.

If spending was going to cut and the deficit balanced, why are the Dems requesting the debt limit be raised to 18.5 trillion?

Gee, it would seem they know there will be no balanced budget and the new taxes won't produce the promised revenue.

We have a spending problem, not a revenue problem.
Last edited by Batboy2/75 on Wed Nov 14, 2012 5:30 am, edited 1 time in total.
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Re: Are we to dumb to know what is good for us?

Post by CharlieBob »

Steggy wrote:Never happen, people talk being fiscal until it is "their" money you start taking from them. Mortgage deduction? Yup, should go and majority paying a mortgage would raise hell. Same with those with a health insurance plan provided by their company. On this one alone the unions would never let it happen.
On the surface yes, but by simplifying the tax code and removing deductions the government would no longer need to inflate the tax rates to compensate. So for example maybe you go from a 30% tax rate to a 15 or 20% because of the removed deductions, so the amount the average person pays stays the same or even goes down potentially plus then everyone can understand the tax code just fine. When more revenue is needed it is very straight forward for the govt to say so and to demonstrate who is paying instead of having all these fucking bells and whistles and hoops to jump through so that nobody understands what is happening.
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Re: Are we to dumb to know what is good for us?

Post by Alfred_E._Neuman »

CharlieBob wrote:
Steggy wrote:Never happen, people talk being fiscal until it is "their" money you start taking from them. Mortgage deduction? Yup, should go and majority paying a mortgage would raise hell. Same with those with a health insurance plan provided by their company. On this one alone the unions would never let it happen.
On the surface yes, but by simplifying the tax code and removing deductions the government would no longer need to inflate the tax rates to compensate. So for example maybe you go from a 30% tax rate to a 15 or 20% because of the removed deductions, so the amount the average person pays stays the same or even goes down potentially plus then everyone can understand the tax code just fine. When more revenue is needed it is very straight forward for the govt to say so and to demonstrate who is paying instead of having all these fucking bells and whistles and hoops to jump through so that nobody understands what is happening.
Beyond that, if we were smart enough to implement all 6 steps listed above we wouldn't have to worry about any deductions at all. Removing the mortgage tax deduction wouldn't matter because income taxes themselves would be eliminated. Removing deductions for charity, children, homestead, etc. would not matter anymore due to the fact that there would be no income tax from which to remove them.

Have something like the FairTax where you have a national retail sales tax. Pre-bate everyone up to the poverty level or even a little above so it's completely progressive by removing low income families from the tax burden. Now you have a completely transparent tax system that anyone can understand and you don't need to pay a team of accountants to figure out how much the government is taking from you. Side benefits are that wealth is taxed, where now only income is taxed. Illegal immigrants are taxed when they buy anything, where now they skate by without paying into our income tax system. And the drug trade it also taxed because that money eventually goes to buying legit goods and services, where now it's just illegally gotten money that doesn't get taxed as income.
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Re: Are we to dumb to know what is good for us?

Post by Batboy2/75 »

Here is a tid bit. If the president gets what he wants, and the Bush tax cuts are not extended for the rich, the Congressional Budget Office predicts that this will bring in 850 billion over TEN years. That is only 85 billion a year. Hey, call it 100 billion.

We are now only 1.0-1.6 trillion short of ballancing the budget for ONE year.

Just going off of the Federal history of spending cuts. What are the chances that the Feds will cut anything vs taxing its way out of this mess?

We have a spending problem, not a revenue problem.

A lot of people are going to surprised over the couple of years that Uncle Sam considers them rich.
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Re: Are we to dumb to know what is good for us?

Post by CharlieBob »

Batboy2/75 wrote:Here is a tid bit. If the president gets what he wants, and the Bush tax cuts are not extended for the rich, the Congressional Budget Office predicts that this will bring in 850 billion over TEN years. That is only 85 billion a year. Hey, call it 100 billion.

We are now only 1.0-1.6 trillion short of ballancing the budget for ONE year.

Just going off of the Federal history of spending cuts. What are the chances that the Feds will cut anything vs taxing its way out of this mess?

We have a spending problem, not a revenue problem.

A lot of people are going to surprised over the couple of years that Uncle Sam considers them rich.
Indeed and far and away the biggest chunk of the pie in that spending problem is entitlements, specifically medicare + medicaid. I mean I was reading somewhere that if we continue the way we are growing by 2030 medicare+medicaid spending would equal 100% GDP. In another thread someone was saying Social security was the problem, but when you look at the numbers SS is not even in the same ball park. This is why it didn't matter who won the election because the "fiscally conservative" choice for president was going to save our budget by cutting from the discretionary spending portion of the budget, which if he simply removed it ALL would reduce the budget gap by like 15%...(though with the hit to the economy from that it may not even help that much) even military spending is less than the 40+% that medicare and medicaid make up.

You want to balance the budget, then welcome to entitlement reform. So far very very few politicians who are claiming to want "balanced budgets" are saying shit all about entitlement reform. I cannot take these people seriously at all because they are either retarded, or just playing the game to get the public all worked up over nothing.

And getting back to the point of the thread, I would like to think at some level people are starting to see this. This is why Paul, despite his cookyness, still garnered quiet a bit of bipartisan support while campaigning.
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Re: Are we to dumb to know what is good for us?

Post by Alfred_E._Neuman »

I agree that entitlement spending will have to be reigned in, with some form of actual health care cost reduction being a major part of that. But $700 billion is fucking ridiculous. We HAVE to cut military spending to even get into the ballpark of talking about balancing the budget.
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