EITC

This is an interesting post:

The main target of Republican ire on the zero-tax front isn’t the elderly or the temporarily unemployed. It’s poor people. And one of the reasons that so many poor people pay no income tax is the Earned Income Tax Credit, which can reduce your tax bill to zero or less. To qualify, though, you need a minimum income (i.e., you need to have a job), which makes the EITC an incentive to work — and this is why it’s an anti-poverty program that Republicans used to support.

…

Roughly speaking, then, Republican support for the EITC has steadily declined since the mid-80s, and the majority of the party has been actively opposed to it since the mid-90s. So I don’t think you can really blame the current antipathy toward EITC on the historical ignorance of modern Republicans. This all started 30 years ago, when Republicans were still keenly aware of both the program’s origins and its conservative policy underpinnings. They just decided they didn’t like the idea of giving money to poor people anymore. Now they’ve gone even further, and Mitt Romney’s echo of his wealthy donors’ disdain for the non-taxpaying poor is merely the next step along a logical path. Here’s the path:

1975-1985: Support for work-oriented anti-poverty programs like the EITC.

1985-1995: Mixed emotions toward EITC.

1995-2005: Opposed to EITC.

2005-present: Not just opposed to EITC, but actively in favor of making the poor start paying income taxes.

I think there are probably two reasons for the shift. One is given by a commenter:

right-wingers discovered that screeching about huge numbers of people  not paying income taxes was the most fantastic talking point in the history of the universe.  It would be far too good to give up, certainly for anything resembling either a practical or principled position.

Another is that Republicans probably took this position as a different way to help the poor to counter LBJ’s War on Poverty. As the years have gone on, though, Democrats talk less and less about helping the poor, so Republicans no longer needed a program for the poor they could support. And so they no longer support EITC.

Republicans: cut taxes for the rich

Kevin Drum has a handy post (look here for some links) showing what we already know: Republicans like the rich. Romney has the smallest cuts for the rich, so let’s look at him (the table is fromhere):

and then there’s this:

The Romney plan would reduce federal tax revenues substantially. TPC estimates that on a static basis, the Romney plan would lower federal tax liability by $600 billion in calendar year 2015 compared with current law, roughly a 16 percent cut in total projected revenue. Relative to a current policy baseline, the reduction in liability would be roughly $180 billion in calendar year 2015.

which means he would have to make large cuts if he wants to balance the budget–yeah, I know, Republicans aren’t really serious about that.

Perry: I want an even bigger deficit

The Republican candidates are tying to one-up each other on taxes. Hermain Cain has his 9-9-9, Ron Paul is going to have a big tax cut and massively cut government spending, and now Rick Perry has a flat tax:

The plan includes a flat income tax rate of 20 percent, but it will also allow any taxpayer the option to remain under the current system, according to a person involved in the Perry campaign. Under current tax law, the wealthiest Americans face a marginal tax rate of 35 percent for much, if not most, of their taxable income

In addition, the plan has a $12,500 deduction for each person in a household, so, for example, two parents with one child would have the first $37,500 of income excluded under the plan.

It will also eliminate estate, capital gains and dividends taxes. This will obviously mean a huge tax cut for the rich, does Perry care?

But I don’t care about that. What I care about is them having the dollars to invest in their companies. To go out and maybe start a business because they got the confidence again because they actually get to keep more of what they work for. If that’s what comes, I’ll take that criticism. Because what I’m interested in is getting Americans working.

 And if the rich just take the money and do nothing with it (as they’re doing now)? He’ll be ok with that also, since in each case it means the rich get more.

And what about the deficit? Since this will reduce taxes for everyone, obviously it will make the deficit worse.

I don’t think it does. The budget deficit needs to be addressed through a number of ways. We think this will balance the budget by 2020. And you’ve got to have some hard cuts. You’ve got to deal with the entitlement issue.

This is known as magical thinking. Cutting government revenue by a lot now and talking about cutting costs later will not cause the deficit bigger now–interesting. Ok, Romney, Bachmann what do you have? At some point, I assume one of them will say they’ll eliminate the income tax completely.

MA Income Tax Question 1: Vote No

I haven’t posted about the resolution to get rid of the income tax in Massachusetts, because it should be obvious where I stand if you’ve read many of my posts (which doesn’t apply to many people, I know). But this article has such an amazing statement, I have to put it up:

As an MBTA employee, George Glidden knows the unions want him to vote against Question 1, which would abolish the state income tax. He’s heard the fears that the ballot question would cause dramatic cuts to state and local services and probably trigger other tax increases to make up the difference.

But taking home an extra $54 or so a week – even, Glidden figures, if he has to pay half or more back in a property-tax hike later – would be worth it.

“It’s about the pocketbook. It’s about everything else going up,” said Glidden, who is 40 and lives in North Attleborough. “If you can give me an extra $20 or $25 a week, that’s a tank of gas – or part of it.”

That’s right, a state worker is basically saying that the state is spending too much. Am I a bad person if I hope that this person loses their job if the question passes?

It’s sort of hard to argue against the proponents of this question, because they don’t care about facts. They continually push the fact that the average savings will be $3700. What they hope you don’t notice is that to get this amount, you have to earn about $74,000 (I’m being rough here: 3700 is 5% of 74,000–the actual tax rate is a bit more than that, but everyone gets the personal deduction and almost everyone has many more deductions (for example you don’t pay taxes on money that goes to SS or medicare, you can deduct rent or …)–my guess if you would have to make quite a bit more than $74,000 to get $3700 back). The mean for people who make between 20 and $50,000 is $1773.

The bigger bit of fudgery is Carla Howell’s claim that 41% of the state budget is wasted. Where did she get this number? A poll (or here) by Citizens for Limited Taxation (hmm, a group that strongly supports getting rid of the income tax). So, she has no basis for that number. How do you argue with people who just make up numbers? One thing to note is that it’s been found that people are pretty bad at estimating numbers. Ah, I can’t gather the energy to argue with dishonest people. Go here for a more complete argument.

Update: It appears that the question will not pass. With 27% of the precincts in, NO has 69% of the vote. That’s very good.