Asymmetrical Information

Are you kidding? Any reduction in the highest tax rate is just a "giveaway to the rich"! I'm afraid you may have your journalistic license revoked if you keep saying otherwise.

(That was sarcastic, by the way)

Or you could compare the tax savings to the cost of living. The $200 may determine if the poor guy eats (or if his child gets that immunization) or not while the $2000 may determine if the rich guy gets a sun roof in his new car.

Going to the extreme, if someone makes $2B/year and pays $500M in taxes then his tax break will be $20M. Will that $20M affect his ability to buy food or clothes? I certainly think I could live on either $1.5B or $1.48B without noticing a difference at all.

On $2B, make the tax rate 99% and I'll try living on the $20M. I don't think it'll be a problem. But tell the poor guy to live on $200 and see what he says...

Note that Mankiw's contention that "people can take the same set of numbers, look at them from different angles, and reach very different conclusions" does not always hold true: it depends on the numbers.

Suppose the poor guy's taxes were cut by $200 (as in Mankiw's example) but the rich guy's taxes were cut by $20,000. The rich guy would be doing better on all three of Mankiw's measures, and no one could reasonably deny that the tax cut was better for the rich than the poor.

Colin:

At a certain income level most people stop spending every penny on personal consumption. Rather, they save and invest their income in something they think will be productive.

While your argument that the tax man should only leave enough for taxpayers to live on makes good bumper sticker sloganeering at election time, serious people need to consider whether high income people acting individually will make better use of the money for the general benefit of society than a centralized, politically motivated budget committee.

word robert.

and tax that 99% of $2b and that poor guy's job suddenly disappears because the marginal return on the rich guy's investment in his business evaporates and he closes up shop.

Alkali

Of course a good political spinner could argue that the rich guy didn’t benefit at all from the tax cut since he already takes home more than enough to live very comfortably on and the tax cut will simply flow to the capital infrastructure of the country which benefits everyone. Whereas, the poor guy benefits greatly since he needs to spend the money to make a better life.

It’s a stretch, but it might just work.

> no one could reasonably deny that the tax cut was better for the rich than the poor.

Umm, yes one could.

While "the rich" may be where the money is, telling "the poor" that govt money is free/comes from someone else, leads to stupid govt spending. That has a disproportionately bad effect on poor people.

Rich people do two things with money. They buy things from poor people and they invest in things that give poor people jobs doing things that other people want. Which of these things do you want to see less of?

I would go by the percentage increase in disposable income.

I would go by the net effect on the growth rate of GDP. Taxing the "rich" (who finance growth-inducing capital investments) impoverishes the poor by inhibiting economic growth.

The point isn't that you get to choose between these when you think about the issue, it is that when a politician opens his mouth, he has chosen among them but isn't necessarily saying anything meaniful.

I disagree. The first two metrics suffer from a fatal flaw.

Arnold Kling suggests that the increase in debt to pay for, among other things, Social Security (well- in this case privatization), is progressive:

However, there is one important difference between keeping Social Security as it is and switching to privatization. Under the current system, Social Security's liabilities will continue to be funded by payroll taxes. However, under privatization, the transitional debt would be repaid using -- guess what? General revenues! In other words, privatization is a vehicle for changing Social Security's medium-term funding mechanism from payroll taxes to income taxes. It is exactly what the Left presumably wants, and what the Right presumably opposes.

"On $2B, make the tax rate 99% and I'll try living on the $20M. I don't think it'll be a problem. But tell the poor guy to live on $200 and see what he says..."

If you think anyone would actually work hard enough to earn $2B/yr with the tax rate at 99%, I have a bridge you might like to buy.

For forgetting the disincentive effect of taxation you receive an F- in Internet Econ 101.

Uh, Noah (and Pat Kelley also), I may be mistaken here, but I'm pretty sure Colin's $20B @ 99% was plainly identified as merely being a narrow, deliberately hyperbolic illustrative of how much absolute well-being matters when examining a tax confiscation's short-term effect on relative change in income. I believe the colloquial term is "a figure of speech."

Should I issue you an 'F' in Internet rhetoric 101?

Re -- 4 ways to pay off debt --

Isn't there any hope of a number five -- sell something?

Suppose the gov't goes into the plutonium recycling business- buying up waste and obsolete warheads from Russia, Pakistan, etc; un-riching the enriched isotopes down from bomb-grade to fuel-grade of about 10% fissile stuff and then sell the resulting fuels to nations that want to reduce carbon emissions. This puts to productive us otherwise sunk-cost and largely idle factories in Oak Ridge and Scandia ...

Suppose somebody wants to put mag-lev trains across the North American continent in de-pressurized (low atmosphere) tunnels. So the US government, which owns the rights-of-way under the interstate highway system, starts auctioning off the digging rights ...

Suppose the US goes to war with Mexico and aquires Baja as spoils -- then sells it off in hundred-acre parcels...

Bad science fiction, I'm sure. But in concept is there anything worth or that will become worth trillions of dollars that the gov't can plausibly be expected to own now and sell later?

It is nice to see someone be honest and recognize that inflation hurts the wealthy the most and not resort to the standard line that it hurts the poor.

"On $2B, make the tax rate 99% and I'll try living on the $20M"

Well, Colin, go ahead. All you have to do is work incredibly hard, risk all you have and come up with such a significant contribution that you earn $2 billion in one year. Go ahead and do it! Even at current tax rates, you will have to make a huge contribution to society, and you'll have plenty of money left for yourself. If you want to give even more to the government (all except that last $20 million), so much the better. All you have to do is earn the money, and we'll all be better off!

Jane Galt, you left out 5) drastically reduce future social security benefits which would of course disproportionately affect the poor.

I am not an economist,nor do I have a background in economics. I am a founding partner of a business that has lasted for more than 10 years, so I do know what it takes to make a payroll.

I drop in here from time to time, and I have to say that you guys live in fantasyland.

And your view of economic reality is, well, quaint. Y'all have a nice day.

Don't let the door hit your condescending arse on the way out.

"2) Inflate/devalue the currency, so that the debt gets repaid in cheaper dollars. This largely hurts investors, aka the rich, whose assets become worth less, while helping debtors, aka regular joes."

Except for all the regular joes whose paychecks either don't keep up with inflation, or go away entirely as investors take their money out of this cockamamie economic system and put it into something that might actually preserve its worth.

"drastically reduce future social security benefits which would of course disproportionately affect the poor."

Why would that have to disproportionately affect the poor? Lets drastically reduce (to zero) unneeded social security benefits to the rich.

Why would that have to disproportionately affect the poor? Lets drastically reduce (to zero) unneeded social security benefits to the rich.

That would have the effect of reducing the cost of Social Security by a couple of percent at most. The rich are a tiny portion of the total population of Social Security recipients.

I'd also like to point our that Prof. DeLong's analogy is fundamentally dishonest. One of the commenter's on his site pointed out (and was ridiculed for doing so) that an honest analogy would have had Prof. DeLong paying $17 in cash for the bill (tax revenues {collected primarily from the well off} cover 85% of expenditures, not 25%), with the remaining $3 going on credit cards, most of which would be paid by whichever of the two was richer in the future.

Do I think a professor of economics was aware that his analogy was fundamentally flawed and dishonest, or do I think this was just an honest mistake?

All evidence shows that inflation disproportionately hurts the poor. The rich tend to hold their wealth in inflation-proof assets. The poor hold their wealth in cash. Inflation wipes out the value of their cash. You can see this clearly in countries that have sufferred high inflation.

Jane - William Gale covered this deferred tax bill issue a ways back. He first looked at the distribution of the tax cuts (aka tax shifts) and then ran a couple of possible simulations of how those deferred tax obligations would be distributed. In both - the lower income folks say a net tax increase while the high income folks saw a net tax cut. Maybe you have a 3rd simulation that gives a different result, but until you do so with the same rigor that Dr. Gale put forth - this is all meaningless babble, sorry to say. Check out Dr. Gale's paper and then report back.

Mindles Dreck - thanks for the link to Arnold Kling's 2000 discussion of the Soc. Sec. tax. Pardon the pun, but Dr. Kling most have lost his mind. Yes, the payroll contribution is regressive in isolation, but Dr. Kling seems to have forgotten about the retirement benefits that are paid for by the Soc. Sec. system. I suspect Richard Musgrave (who ably wrote on this issue in the late 1950's) would have flunked any student who wrote such an incredibly incomplete "analysis".

pgl--such analyses are highly dependant on the assumptions you put into them. If you assume that the government will rely on regressive taxes to fill the gap, then the tax shift will be regressive; if you assume that the government will rely on progressive taxes, then the tax shift will be progressive. The exquisite thoroughness of the mathematics is irrelevant; it's the political calculus that matters. And I tend to believe that regressive taxes will be a very hard sell to the public.

Barry: what evidence? All the evidence I've seen shows the opposite. Yes, some poor people are hurt by inflation, mostly those who have to live on the minimum wage, and a small number on fixed income investments. But most people who rely on income other than wages to survive depend on government payouts that are indexed to inflation. Some peoples wages won't rise as fast as inflation; others will rise faster. But overall, inflation erodes the value of fixed income assets, such as bonds, much more quickly than anything else--and fixed income assets are largely held by wealthy people. Meanwhile, everyone with a mortgage, a credit card, or a student loan gets a sizeable bonus in the form of reduced real debt payments--a break much more valuable to the poor and middle class.

Jane - one's conclusions do depend on one's assumptions. Over at Angrybear, I link to the paper by Gale et al. where they lay out their assumptions and analysis in detail. Enjoy!

OK, but how about the fortunes of the rich being tied to the spending power of the poor. Consumer spending being such an important component of this economy (70% according to some estimates), at least in terms of the country's GDP (not to mention the profits of many Fortune 500 companies), it would stand to reason that if their take home pay increases, they will inevitably purchase more (and put less on their credit cards). As a marketer of fast moving consumer goods, I appreciate when more consumers have more discretionary spending. Once they have to start shifting their dollars from consumer spending to survival (healthcare, food, etc.), I as a marketer suffer and so do my stockholders. Same goes for car companies, builders, electronics, computer makers etc. the more the masses can afford, the better, I say.

pgl: as I say, I find their assumptions doubtful:

The first scenario assumes that each household pays an equal dollar amount each year to finance the tax cuts. Under this scenario, each household receives a direct tax cut based on the 2001 and 2003 legislation, but it also “pays” $1,520 per year in some combination of reductions in benefits from government spending or increases in other taxes to finance the 2001 and 2003 tax cuts. Something close to this scenario could occur if the tax cuts were financed largely or entirely through spending cuts. We refer to this as the “equal dollar burden” scenario.

The second scenario assumes that each household pays the same percentage of income to finance the tax cuts. Under this scenario, each household receives a direct tax cut based on the 2001 and 2003 legislation, but it also pays 2.6 percent of its income each year. Something close to this scenario could occur if the tax cuts were financed through a combination of spending cuts and progressive tax increases. We refer to this as the “proportional burden” scenario.

Missing is a third scenario: A future president stiffly raises taxes on the rich, with smaller increases for other people. This would make the distribution progressive.

Now, consider, is it even remotely politically possible that the president is going to impose a $1500 surcharge on every family in the country, including ones who currently make, say, $10K a year. Maybe in ProgressiveWorld, where presidents to the left of Chairman Mao lie awake at night thinking up new ways to screw over the poor. But in the regular world, not even Republican presidents campaign on such programs. In order to get that effect, you would have to sharply raise marginal rates on the poor by less than those on the rich, an idea for which there is simply no political support.

Nor is scenario two particularly likely. AFAIK, since the 1960's, the only tax increases qua tax increases have been on people in the top income quintile. In fact, AFAIK, there have been only two large tax increases on ordinary people in American history: WWII, and the last Social Security deal.

Sebastian Holsclaw, your objection would be stronger if Bush had actually proposed cutting social security benefits only for the rich but of course he didn't. Actually there is a good reason for this. Speaking as a rich (in this context) person myself I would be much more upset about a targeted cut in my projected future social security benefits than an increase in my taxes. I expect I am not unique in this regard.

James:

Social security has a lousy annual rate of return ( less than 2% annually). Savings accounts or CDs are better.

Lower taxes get me a much higher net present value.

I've thought for a while that the US government would inflate the money supply to deal with the national debt. It looks to me that there are simply too many constituencies that would benefit: the government, people in debt (many poor and middle income folks), and asset holders (the rich). Well, people with hard assets probably just don't care that much, since the impact on them would (in most cases) be marginal.

As I recall, income brackets are set in absolute dollar terms--they're not indexed to inflation. If I'm correct about that, then inflating the currency is a practical approach for raising everyone's taxes--just wait for higher prices to lead to higher wages. So, politicians would probably favor inflating the money supply. Given a choice between raising taxes and/or cutting spending why not opt for the third way: print more money? (I don't support this, I just see it as politically inevitable.)

We need to think about the inflation aspect a lot more. The Fed recently stopped publishing M3 data and precious metals are way up. What does all this mean? From a practical stand point, what does it mean to a middle income earner with an adjustable mortgage? Will the appreciation of their home (and presumably their wages) offset the beating they'll take when the ARM adjusts?

The average citizen conflates federal debt with personal debt. The error is that we all know that we have to repay debt; we won't live forever. However, there is no reason that the federal debt should ever be repaid. The interest on the debt is the only fiscal encumbrance. The debt can roll forward ad infinitum as long as the U.S. economy is perceived to be sound. As long as the perception is not that we have an excessive amount of GDP tied up in debt instruments there is no harm.

Who cares what Brad DeLong thinks?

I strongly disagree with James B. Shearer about preferences of the "rich" between higher taxes and lower future Social Security benefits.

Of course, there are age differences in the expected costs to a future beneficiary of any particular change in the benefits formula, but those aside, I think that preferences in this are likely to come down to their degree of confidence in the sustainability of the Social Security system as currently structured vs their confidence in their savings and investment ability (since the avoided tax increase can be invested to offset future benefit cuts).

I would expect that high income people would have more confidence in their savings investment skills than the population as a whole, but I can't see any reason why higher income people would have more confidence than average in Social Security, so I'd expect them to be more willing to accept benefit cuts than others if they believe that the alternative is tax increases which will fall primarily on them.

jody and telnar, I would object more to a cut in my future social security benefits than an increase in my future taxes because I would see the cut in benefits (particularly a means tested cut) as illegitimate in a way that a tax increase is not. In any case I don't think it is very likely.

So summarizing: you favor taxes to benefit cuts for emotional not economic reasons.

I'm guessing the illegitimacy comes from the perceived broken "promise" of reduced benefits although technically Soc Sec promises nothing and just makes projections. Although I could easily argue that the greater illegitimacy is the government's redistribution of my income. For example, I don't believe redistribution constitutes a public good and therefore is an illegitimate government action. The greater the redistribution, the greater the illegitimacy.

But favoring emotional results to economic results is ok as not everyone is homo economicus (or salvaging homo economicus, emotional satisfaction can be a major component of a person's utility). For a bipartisan example culture, i.e., emotions, trumping economics is the subject of What's the Matter with Kansas.

However, my overriding concern when discussing retirement planning is economics, so the relative illegitimacy of benefit cuts viz a viz the legitimacy of higher taxes is a non-starter for me and we'll have to agree to disagree as to whether higher taxes or lower benefits is more upsetting.

"Actually there is a good reason for this. Speaking as a rich (in this context) person myself I would be much more upset about a targeted cut in my projected future social security benefits than an increase in my taxes. I expect I am not unique in this regard."

I'm sure you are not unique in this regard but that does not make you wise in this regard. A rich or middle class person can prepare for his own retirement better than Social Security. And he should. If Social Security really were the safety net that its defenders talk about it would be easily affordable. Protecting poor elderly people from being on the street by paying the majority of the money to middle class and rich people who can perfectly well fund their own retirement if warned a couple of decades in advance is a really silly policy.

I've argued alternate tax schemes with many people in the past. In particular the Fair Tax. It's really quite interesting that for many of them, progressive does not mean 'harms the poor less' but rather 'harms the rich more'. Thus any tax change that potentially benefits the rich is regressive in their mind.

It should also be noted that growing the economy faster than the debt is also an acceptable solution. What really matters is the debt to GDP ratio and the deficit to GDP ration. Grow the GDP faster, and the later deficit and debt become a much smaller problem.

Jane - I'm not defending their assumptions, but I am asking you to provide an analysis that includes the initial 'cuts' as well as the means for reducing the deficit. You seem to focus on the latter ignoring the former.

With few exceptions, poor people don't buy government bonds. By cutting taxes on the wealthy and running deficits, not only is the tax cut regressive because it shifts a greater percentage of the tax burden onto the less wealthy, it shifts redistribution as well. Instead of collecting tax revenue to run government programs, the government borrows the same money from wealthy bond holders and PAYS THEM INTEREST. This amounts to additional redistribution of wealth to the wealthy bond holders. Any argument that this is not regressive necessarily depends on looking at a small slice and not the whole pie.

Bakho:
Did you even read the post? The bondholders who receive the interest payments may be mostly wealthy, but so are the taxpayers from whom the interest payments are taken.

Darin - you're wrong, since about 1982. One of the enduring benefits that President Reagan brought Americans was an end to "bracket creep" by the indexing of tax brackets. Each year the brackets are automatically adjusted for inflation.

There is some residual bracket creep, as most people see increases in their earnings which are slightly higher than inflation over time, as they get promoted to better-paying positions or get raises higher than inflation, or take better paying jobs. People with mortgages may see a little bit of this as the amount of the mortgage interest deduction they can claim falls each year.

Ummm . . . pgl, the whole post was about an op-ed that argues that the cuts were in fact progressive, because the poor and middle class saw bigger percentage cuts in their taxes. Brad DeLong says "not so fast--what about hte deficit!" I say "The deficit will probably hit the rich, not the poor." How have I not addressed this?

You're not defending their assumptions, because they're indefensibly silly, designed to get the result they wanted. (I'm a big fan of Gale's work on long term liabilities, but still . . . GIGO). Obviously in dollar terms, the rich got more than the poor from the tax cuts, but unless you think that the poor and middle class will pay a disproportionate share of the cost of the deficits, it is not mathematically possible for them to be worse off, nor for them, as a percentage of income, to pay more than the wealthy. The poor and middle class already paid a fairly trivial percentage of their income to the taxman even before the Bush tax cuts.

If you assume, as I think is reasonable, that future tax increases will come from income tax rather than payroll tax, and that they will be progressive, as most tax increases in our nation's history have been, why, then the poor and middle class are suddenly much better off from the Bush tax cuts than the wealthy. I wonder why that scenario--which you'll at least concede is reasonable--never made it into Gale's paper?

Inflation hurts some people at all income levels, and benefits some people at all income levels.

People with wage agreements which automatically index for inflation don't lose out, while people who pay employees under such agreements (taxpayers!) do.

Debtors with fixed interest rate debt benefit, while debtors with variable rate debt, like most credit cards and many mortgages, are hurt.

Savers/investors who hold their savings in fixed rate instruments, such as cash (interest rate = 0%), CDs, or bonds lose out, while in theory investors in stocks, real estate or other investments which reflect real assets will benefit.

However, in the long run, inflation distorts investment decisions, by increasing the return required to make an investment profitable and thus driving investment away from profitable activities into gimmicks and tax shelters. Also, when inflation increases, expectations for future inflation go way up, which further distorts investment decisions. These effects tend to make everyone worse off, or at least less well-off than they nmight have been.

"If you assume, as I think is reasonable, that future tax increases will come from income tax rather than payroll tax, and that they will be progressive, as most tax increases in our nation's history have been, why, then the poor and middle class are suddenly much better off from the Bush tax cuts than the wealthy."

The future wealthy who pay increased taxes may not be the same people who are wealthy today. At 55, I enjoy a much higher income than I did at 25. I'm also wealthier by a factor of 1,000 or more.

I'm not suggesting that the Bush tax cuts should have benefitted anyone more or less.

The only fair tax is a true flat tax: a fixed dollar assessment per adult, regardless of income or wealth. I may earn three times what my brother earns. That's no reason I should pay three times (or 20 times) what he pays for national defense or for my mother's social security benefits or for maintainence of the national parks.

Sebastian Holsclaw, actually I have provided for my own retirement. As a reward you want the government to take away my social security benefit while preserving the benefit of someone with my lifetime income who spent it all. I don't think I am the one backing a silly policy.

Jane Galt, you can speculate all you want but what Bush actually proposed was cuts in social security. There has also been talk of a VAT.

I don't see the payroll tax as particularly regressive. It is not a general pool where the money is divided amongst the constituents in such proportions as the Congress decides for this year. The amount you pay is directly related to how much you get back eventually. Currently, you get a smaller percentage of your input the more money you make. In the future this is likely to stay the same or 'get worse'.
There is a calculator on a government site that suggests payments received at retirement here.
I did some figuring and here are the results for someone retiring this year:

Income/year  Payment

$20,000      $  801.00

$40,000      $1,195.00

$80,000      $1,867.00

Speaking as a rich (in this context) person myself I would be much more upset about a targeted cut in my projected future social security benefits than an increase in my taxes. I expect I am not unique in this regard.

As another (relatively) rich person, I disagree completely. Barring a financial disaster that leaves me in poverty, there is no reason why I should collect a penny of SS benefits in 40 years. Yes, I'm paying a lot of taxes to prop up a fraudulent Ponzi scheme. That doesn't justify turning around and victimizing future generations.

"Barring a financial disaster that leaves me in poverty, there is no reason why I should collect a penny of SS benefits in 40 years."

If you want to return the money that's rightfully yours, feel free to do so. But don't try to impose your sense of charity on the rest of us.

The problem is that promises were made and need to be kept. If all the promises cannot be kept, then everyone should suffer equally. Don't eliminate the benefits of those who worked hard and were thrifty for all their lives. Reduce everyone's benefit 27%.

I see no reason why my underachieving siblings or anyone else like them should receive more government retirement benefits than I will receive. How do they have more right to those benefits than I have or than Bill Gates has? They've had just as many years as I had or Mr. Gates had to prepare for the known social security shortfall.

Everyone makes tradeoffs in their lives. I knew folks growing up who's parents were making about what my parents where making, who went to Florida for spring break every year, and two weeks in the summer. Lots of them.

The reason they could do this is they were saving absolutely nothing for their retirement. They were in debt to their eyes to sustain their lifestyle.

By contrast, my father very carefully saved for his retirement, so he could be sure to support my mother in their dotage.

That's what I remember every paycheck when I pay my social security taxes: I am paying for the vacations my friends took when I was a kid, I am paying for all the lifestyle benefits their parents bought with money they should have been saving to support themselves in their retirement. As you can imagine, this gives me a warm fuzzy feeling about the program... doesn't everyone love paying for the irresponsible enjoyment of others, particularly when one is being punished for behaving responsibly?

"The problem is that promises were made and need to be kept." They were lying. If you were paying attention, you knew they were lying. Now you want my children and grandchildren to pay for your gullibility.

markm,

I don't want your children and grandchildren to pay any more than I've had to pay. But I do expect them to pay that much.

What I am advocating is sacrifice shared by all retirees. That's different from what I think Brian is suggesting above, that all sacrifice should come from the those who weren't gullible and who did acquire wealth. If social security can only fund 73% current benefits after 2018 or 2030 or whenever, then all retirees get a 27% cut. Any who can't live on the remainder can go back to work.

Until recently, social security advocates insisted that it had to be universal, in both pay-in and pay-out, otherwise the politically connected would treat it as welfare (as well they should, since it would be). This was thought to be a bad thing.

What has changed? Or, are the "turn it into welfare" social security proponents actually opponents flying a false flag/pulling a Moby?

John: Sorry I confused you with the innumerate majority of older people who won't even consider cuts - but old people will soon be a majority of those who bother to vote, and it doesn't seem likely that any politician will be able to even talk about cuts and survive.

The problem is, assuming you are now between 40 and 60, you and I paid for the survivors of two older generations to get back much, much more than they paid in. This was possible because there were a lot of us compared to the number of old people in the pre-WWII generations. IIRC, when Social Security was first enacted, something like 5/6 of people didn't even live to be 65, so they never got anything back. But now, there's nothing left of what we paid in, and most of us are going to live past 80. We're going to spend more on medicine than was imaginable to my grandfather - quite a lot of it on things that actually do work better than what they used to have - and we're going to try to get the government to pay for it, on top of our bare living expenses. And pretty soon, there will be one of us old codgers for every two people in the workforce.

Of course, I'm probably going to be in that workforce too, no matter what happens to social security. I like working as an engineer. My father earned a fat pension as a teacher, and is now "retired" but teaching as a volunteer. I can't imagine what my grandfather found interesting in selling insurance, but there must have been something - he sold two agencies and retired rich, but founded and a third one and ran it until he was 85. One of my great-grandfathers was still working at 89, and two great-uncles could retire on the proceeds from selling his business. Few people actually have to retire until they're so sick that they're about to die anyway, but the lying bastards in Congress have long been promising them that they merely have to reach a magic number of years, and then they can live in ease for decades (with no mention of at whose expense).

markm, being an United States citizen has benefits and obligations. One of the obligations is a share of responsibility for fulfilling past commitments made by the United States government. If you are not willing to pay your share I suggest you emigrate.

Marmm: Gullible? Not me; I've never knowingly voted for a candidate for federal office who wasn't willing to consider social security reform.
Nevertheless, in spite of being responsible, I still had to pay because otherwise men with guns would come and arrest me (or worse.) Anyone know of a way to make only the gullible pay for the coming social security disaster?

"If you are not willing to pay your share I suggest you emigrate."

That won't help - the US taxes its citizens no matter where they go in the world. He'd have to renounce his citizenship, and I bet the IRS would still try to collect.

Markm,

I've long been aware of your points about demographic challenges and about relative returns to the generations. But I appreciate reading them again.

The way to force sacrifice by seniors is to slam guilt into their heads for the next 15 years. Also, continued advertising of unfair generational burdens might wake up younger voters.

Means testing of benefits is what I truly fear. Punishing the thrifty and hard-working is the most unfair solution, and also the solution that encourages the most harmful behavior. ("Why save to augment social security pensions? Government pigs are just going to take it away.")

>Raise taxes to pay it off. This will be a burden on America's relatively poorer members only to the extent that the tax burden falls on them.

This is plain old false. Taxes on the "rich" include taxes on investors, employers, consumers etc. Higher taxes on the wealthy (Ben Stein's flip flop notwithstanding) hurt the poor every bit as much as they hurt the rich.

Comments are Closed.