Taxes

[Pete Hanlin]

The argument about rich and loopholes is if the tax rate is 25 percent, that rich person may find a way to make it 15 or 20 percent of his or her income. So if you tax at the same rate, the poor person will be paying a larger percent.
Lest you think rich people are the only ones who dodge taxes- and by way of explaining some of my own consternation regarding the redistribution of wealth- here is where a personal experience formed my opinion on the subject...

In one of the first years of the "Earned Income Credit," I was helping someone I worked with fill out the 1040. This person had two children, but had never married- but lived with the parent of the second child (didn't marry, because they were receiving some sort of benefit- money- by being a single parent on a "limited income").

At the time, I had two kids of my own and a stay-at-home wife. I made around $40k per year, so- while we weren't living high on the hog- we weren't poverty stricken, either.

Well, throughout the year this person would often comment on all the money brought home by the live-in partner (roofing and other carpentry work). It was pretty easy to figure up that their household (including her salary and his) was easily surpassing the $40k on which we were living (and the new car, new clothes, clubbing every other night, etc. attested to just that).

Fast forward to tax time. I think I ended up paying (i.e., paid more tax in than was refunded) around $3k or something like that- not a ton. She didn't pay any taxes- but (because she filed as head of household and partner didn't report income) managed to get about $1,500 as a "credit." As I recall, she was disappointed the sum wasn't larger- even when I pointed out she was receiving free money because she hadn't actually paid any taxes!

It was at that point that the pointlessness- and basic flaw- with the attempt to redistribe wealth hit home. "Trickle down" economics basically holds that- if you let wealthy people keep their money they'll spend it and benefit the economy. "Trickle up" seems to hold that- if I give my money away to someone less fortunate, they will spend it and somehow I'll eventually get it back. How bout if I just keep it in the first place? In this case, I felt I might as well have just written my coworker a check to transfer money from my account to hers. No, the "rich" do not have the corner on cheating the tax man...

The bit in the Consitution (Art. I Sec. 8) that empowers Congress to lay taxes to provide for the "common Defense" also empowers it to provide for "the general Welfare." Sorry, Pete, but there is no limitation there; it's the broadest power granted to the Congress in the Constitution. And it's sensible; we spend what we decide to spend. Y'know, democracy. Feel free to argue that Americans should institutionalize selfishness (I mean, individualism), but don't thump on the Constitution for support. It's up to us.
First, you apparently are not arguing that I'm not only paying into SS for myself- but I'm also subsidizing others by paying them back what they paid in. Also, you are now proposing the people who wrote the Constitution felt the federal government should not only defend against foreign enemies, but should also pass laws and programs to provide a certain standard of living (apparently whatever Congress feels is adequate) to every citizen? This will surprise you, but I think you're chosing to interpret that a bit broadly, Robert. Furthermore, I think you're smart enough to know that if you really put your mind to it- I have confidence in you.

As for the instituting selfishness- its not that I don't think every person has an obligation to help those in need (that's a personal belief of mine which I put into action, in fact). In this country, however, people are supposed to be free to believe what they want. The "Great Society" forced a set of beliefs on everyone when it comes to charity- and gave everyone (including- as Steve likes to put it- our children and grandchildren) the bill. No "social spending" isn't a complete waste- yes, there is more than enough waste in other programs- like the military.

That's okay, Robert- don't get it... and continue to believe that somehow you possess the sanctimonious high ground. For my part, I'll do what I did years ago after becoming disillusioned with our tax system- I'll get up the next day, go to work, and try to make enough to support my family. I may have to work harder to make up for the money people like you want me to give to other people- but at the end of the day I'll just continue to be that middle class grunt that gives liberals (and militarist alike) their seemingly never ending supply of "throw away money." On the rare occasions that I dare suggest I shouldn't have to give away my money, liberals will degrade me as being "selfish-" but I'm learning to live with it. Oh, and I'll keep looking for a candidate who doesn't believe in governmentally mandated charity.

[shanbaum]

Sorry, Pete, but “my interpretation” is neither overly broad, nor even controversial, at least not since 1937. Here’s a pretty good summary of the state of Constitutional law on the point:

There are, however, limits upon the scope of the Spending Power. The Supreme Court has articulated at least four such restrictions. First, the exercise of the spending power must be in pursuit of the general welfare. See Oklahoma v. Civil Service Comm'n, 330 U.S. 127 (1947); Helvering v. Davis, 301 U.S. 619, 640 (1937). Second, the conditions on receipt of federal funds must be reasonably related to the articulated goal. South Dakota v. Dole, 107 S.Ct. 2793, 2796 (1987). Third, Congress' intent to condition funds on a particular action must be authoritative and unambiguous, "enabl[ing] the States to exercise their choice knowingly, cognizant of the consequences of their participation." Pennhurst State School and Hospital v. Halderman, 451 U.S. 1, 17 (1981). Fourth, the federal legislation may be invalid if an independent constitutional provision bars Congressional actions. The independent constitutional bar rule "stands for the unexceptionable proposition that the power may not be used to induce the States to engage in activities that would themselves be unconstitutional." South Dakota v. Dole, 107 S.Ct. at 2798.

State of Nev. v. Skinner, 884 F.2d 445, 447 (9th Cir. 1989).

You may notice that all but one of these elements really just state the obvious (the power to spend on the general welfare is limited to spending on the general welfare, the spending has to be related to its stated purpose, and nothing that is unconstitutional can be constitutional); the third element relates to Congress’ habit of conditioning disbursements of federal funds to the states on the states meeting its terms – i.e., conditions that it lays down. That’s the only bit that has been even slightly controversial in recent memory.

[Pete Hanlin]

Sorry, Pete, but “my interpretation” is neither overly broad, nor even controversial, at least not since 1937.
Considering your tendancy to demonstrate your knowledge of the Supreme Court, perhaps you might have elaborated on exactly what happened in 1937 to change the scope of federal government.

You see, FDR was my grandfather's favorite President- so I've read a bit concerning his administration. For anyone who feels President Bush has overstepped his bounds with the Patriot Act, I would invite them to find & read the following book: FDR and the Supreme Court Fight, 1937: A President Tries to Reorganize the Federal Judiciary, by Latham.

For anyone who wonders just how we went from a government originally founded on the power of state governments to a system where the federal government seems to be involved in virtually every aspect of your life, just read the text of FDR's fireside chat from 9 March 1937 (it used to really bug my grandfather when I referred to that date as the real "Date of Infamy"). In fact, here's the text: http://www.hpol.org/fdr/chat/.

As most of us know, FDR was elected right after the big crash of 1929. So, FDR was armed with a populace that was ready to agree to just about anything to fix the economy (one man of the time said "its like we are all drowning and are willing to cling to anything floating by"). Taking advantage of the panic, FDR and Congress passed legislation which expanded the power of the federal government at an unprecedented rate. The only snag? Well, the Supreme Court had an incovenient habit of repealing the legislation FDR was managing to push through on a 5-4 vote.

Of course, FDR knew what was best for everyone (sound familiar?), so he proposed to "fix the problem" with the following scheme: instead of appointing justices for life, require them to retire at age 70 (it might be illuminating to note that SIX of the justices were over 70 at the time). Failing retirement, the President and Congress could appoint new justices to serve alongside them. So, FDR's proposal would result in the opportunity to immediately nominate six justices to a Congress which had already shown a tendancy to approve whatever FDR proposed- and would have potentially increased the number of justices to 15. Problem conveniently solved...

As it turns out, even FDR couldn't get the American people completely behind a scheme to limit the power of an entire branch of government (the highest approval rating for the scheme was around 45%- right after 9 March). Additionally, a Senate investigation into the court packing scheme called it "a needless, futile and utterly dangerous abandonment of constitutional principle … without precedent or justification."

However, at least one justice "got the message" (Justice Owen Roberts, who started to vote FDR's way in 1937)- plus, FDR managed to simply outlast the rest of the justices (FDR would eventually appoint 8 SCJs).

So there you have it- it just goes to show how much damage one man (with a compliant Congress and a panicked populace) can do. I know there are a LOT of FDR fans (including my late grandfather). However, I will always feel the "New Deal" was more of a "Raw Deal," and would back up that opinion by noting that- even after all the reforms and expansions of government brought about by the New Deal- it wasn't until WWII that the nation eventually pulled out of its economic crisis.

So, you're absolutely right- Shanbaum (as you always are). Your concept of federal government was established by FDR in the '30s when he opened his Pandora's Box. 70 years later, you still don't get it.

It shouldn't be the federal government's job to provide healthcare and retirement funds for Americans. The federal government currently tries to do so largely as a result of the "New Deal." Unfortunately, so many people are in on the deal, that it now seems impossible to get a new deck...

[shanbaum]

So, you're absolutely right- Shanbaum (as you always are). Your concept of federal government was established by FDR in the '30s when he opened his Pandora's Box. 70 years later, you still don't get it.

I'm absolutely right but I don't get it? Now, that I don't get.

The flaw in your thinking, Pete, is that this isn't just my concept of the federal government - it's what the law is, at least, today; and arguably, even for longer than the last 70 years (there being a lone, discredited 1936 case that limited the spending power).

You may certainly argue that the law should be something other than what it is - help yourself.

You could start by telling us how the spending power granted Congress in the Constitution is actually limited by the Constitution. Preferably, something in the text of the Constiution itself (wouldn't that be best?).

[1968]

You may certainly argue that the law should be something other than what it is - help yourself.

You could start by telling us how the spending power granted Congress in the Constitution is actually limited by the Constitution. Preferably, something in the text of the Constiution itself (wouldn't that be best?).

Since this is an argument that goes back to Madison and Hamilton, I'm not sure that any of us could present a single point that hasn't been heard before. We are all free to interpret the Constitution as we wish, but fortunately or not there are only nine opinions that count. I don't believe there was any consensus on what "general welfare" meant at the time it was drafted, so it appears that the wording gives us (or rather our elected officials) some "elasticity" in providing for whatever it may be.

[Pete Hanlin]

I don't believe there was any consensus on what "general welfare" meant at the time it was drafted, so it appears that the wording gives us (or rather our elected officials) some "elasticity" in providing for whatever it may be.

I can live with that- I suppose Robert, FDR, and others view on general welfare are just a lot more "elastic" than my own.

In my opinion- FDR "elasticized" (if that's a word) the definition of "general welfare" far beyond what is prudent (to use a George H.W. Bush term) or necessary (LBJ stretched it even further). Robert obviously disagrees. Since he continues to define my viewpoint as being one based on "greed and selfishness-" I would argue he does not "get" where I am coming from.

Its not about greed, Robert- its about taking personal responsibility for one's own welfare. Charity is laudable- the assumption of personal responsibilities by the government is unwise and- more important impractical (in my opinion).

[rinselberg]

There are only two observations about taxes that I ever understood. There's the one that everyone knows..."Death and taxes"... commonly attributed to Ben Franklin (?), although I'm not sure that he is the one who is actually credited by history as having published it first. And there's another one from an old "talk record" on vinyl featuring the late radio personality Jean (Parker) Shepherd (died in 1999)... about his childhood in Chicago and his "old man", who was in the habit of downing a can of Pabst Blue Ribbon (if I remember the brand) for breakfast.

Bla-bla-bla taxes, bla-bla-bla the White Sox ... bla-bla-bla the whole damn thing.

Anybody ever heard that before? I wish I could find it recorded online as an audio format sound byte.




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[shanbaum]

Robert obviously disagrees. Since he continues to define my viewpoint as being one based on "greed and selfishness-" I would argue he does not "get" where I am coming from.

I don't recall saying anything about "greed."