Democratic discomfort on the taxes that would actually fund their ideas

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Pointedstick
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Democratic discomfort on the taxes that would actually fund their ideas

Post by Pointedstick »

There's a lot of insight in here. I encourage folks to read the whole thing, but here's an abridged version:

http://www.bloombergview.com/articles/2 ... ddle-class
Is $250,000 a year in household income “middle class”?

That sort of income puts a family in the top 5 percent of American earners, which seems like an overgenerous definition of “middle class.” Why, then, are Democrats so allergic to raising taxes on people who make less than this fabled cutoff? Hillary Clinton and Bernie Sanders want to spend money on a lot of stuff: single-payer health care, more generous Social Security benefits, universal preschool, free college, worker training. They are probably not going to be able to pay for it with the piddly sums one can raise from even large tax hikes on the very highest earners. Yet both of them seem wedded to the idea that taxes should not rise significantly for anyone who makes less than $250,000 a year.
[...]
Oh, I know: Many urban progressives say they’re willing to pay higher taxes. But my anecdotal experience of talking to them is that they think they’d be kicking a few thousand more a year into the collective kitty, not they’d be willing to see their personal income reduced by, say, 15 percent in perpetuity. That would make it challenging for them to pay the sizeable mortgages they have assumed -- mortgages that would not shrink just because their tax bill had gone up.
[...]
So why are Democrats paying so much attention to the interests of high-but-not-astoundingly-so-income voters, rather than the lower-income folk who swing decisively in their favor?
[...]
I can propose a couple of answers to this. The first is that Democrats never got over their reputation as the party of tax hikers, and what it did to them in the 1980s. They regrouped, rebranded as “the party of hiking taxes on really rich people who stole it all from the rest of you anyway” and came back to Clintonesque victories. There’s no appetite for trying again to be “the party of taxing everyone, a lot.”

The second is that those affluent-but-pinched progressive folks in coastal cities may not be a large fraction of the electorate, but they are a huge fraction of two very important groups: the professional political class, and the media.
[...]
That might mean negative coverage for your shiny new plan. Far better for politicians to propose wonderful new programs piecemeal, paying for all of them with the same handful of popular-sounding tax hikes on financial firms and wealthy people, than to develop a comprehensive progressive agenda, and a comprehensive progressive tax plan to go with it.
[...]
What this suggests is that we probably won’t see Democrats brave the sub-$250,000 tax hike until they absolutely have to. Which also suggests that if we have a Democratic president, all those expensive policy promises are likely to be either deficit financed, or dead-on-arrival.
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Re: Democratic discomfort on the taxes that would actually fund their ideas

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That's because "the rich" will pay for everything!  :P
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Re: Democratic discomfort on the taxes that would actually fund their ideas

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So, how much do the rich (say the top 1%) actually make, and how much tax do they actually pay?

Per http://taxfoundation.org/article/summar ... tax-data-0 (not exactly left leaning), in 2012
  • it takes an AGI of $434,682 to put you in the top 1%
  • those in the top 1% have a total AGI of $1.9T, nearly 22% of the entire country's AGI (up from a not exactly comparable 8.5% in 1980)
  • those in the top 1% pay an average of about 22.8% of their income in taxes (down from nearly 35% in 1980, again not exactly comparable)
The one statistic that goes the other way, percentage of total income tax paid by the top 1%, has gone from about 19% in 1980 to about 38%. However, the 19% in 1980 was on 8.5% of the total country's AGI and the 38% in 2012 is on 22% of the total country's AGI - so relatively speaking, the top 1% is contributing less toward the total income tax bill than they were in 1980 (they now suck down 2.5x the percent of the AGI but only contribute 2x percent of the total tax bill).

If the effective tax rate on the top 1% were reset to 1980's 35% (which would require a new, higher, marginal tax rate on those making over $434,000/yr), this would bring in an additional $228 billion dollars in tax revenue.

Minor footnote - the incremental cost of paying public college tuition for current students (beyond subsidies already provided) would be about $40B (see http://www.theatlantic.com/business/arc ... ee/282803/).
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Re: Democratic discomfort on the taxes that would actually fund their ideas

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rickb wrote: So, how much do the rich (say the top 1%) actually make, and how much tax do they actually pay?

Per http://taxfoundation.org/article/summar ... tax-data-0 (not exactly left leaning), in 2012
  • it takes an AGI of $434,682 to put you in the top 1%
  • those in the top 1% have a total AGI of $1.9T, nearly 22% of the entire country's AGI (up from a not exactly comparable 8.5% in 1980)
  • those in the top 1% pay an average of about 22.8% of their income in taxes (down from nearly 35% in 1980, again not exactly comparable)
The one statistic that goes the other way, percentage of total income tax paid by the top 1%, has gone from about 19% in 1980 to about 38%. However, the 19% in 1980 was on 8.5% of the total country's AGI and the 38% in 2012 is on 22% of the total country's AGI - so relatively speaking, the top 1% is contributing less toward the total income tax bill than they were in 1980 (they now suck down 2.5x the percent of the AGI but only contribute 2x percent of the total tax bill).

If the effective tax rate on the top 1% were reset to 1980's 35% (which would require a new, higher, marginal tax rate on those making over $434,000/yr), this would bring in an additional $228 billion dollars in tax revenue.

Minor footnote - the incremental cost of paying public college tuition for current students (beyond subsidies already provided) would be about $40B (see http://www.theatlantic.com/business/arc ... ee/282803/).
Assuming the higher tax would bring in the $228 billion, how would the other half of the deficit be covered?  http://www.usgovernmentspending.com/fed ... chart.html

... M
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Re: Democratic discomfort on the taxes that would actually fund their ideas

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rickb wrote: Minor footnote - the incremental cost of paying public college tuition for current students (beyond subsidies already provided) would be about $40B (see http://www.theatlantic.com/business/arc ... ee/282803/).
That's a lot less than I thought it would be.  You could make an argument that removing the layer of student loan debt that weighs down much of the age 20-40 working population and seriously cuts into their spending, housing etc would actually boost the GDP enough to at least partially make up for the investment.

After another 5 minutes of thought though, you'd realize that there would be a slew of unintended effects:  1) colleges would raise tuitions in the same way that insurance companies are raising health care premiums, to take full advantage of the government largesse; 2) the government would notice this and start imposing price controls, along with increasing documentation requirements that would soon be set in stone and impossible to remove, and finally 3) colleges would be faced with a combination of reduced income and increased costs, which they'd probably deal with by increasing professors' teaching loads and laying off faculty while pushing those that remain to bring in more research funding and eventually cutting salaries, forcing those who are best able to do so (generally the best teachers) to leave.  Result:  bloated administrations and watered down education.

No thanks.  Seeing this process at work in health care is bad enough.
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Re: Democratic discomfort on the taxes that would actually fund their ideas

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And 4) enrollment would increase sharply, exacerbating the other problems and ballooning the cost of the program over time. Has there ever been a federal government program that didn't drastically exceed its projected costs?
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Re: Democratic discomfort on the taxes that would actually fund their ideas

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The other day the wife and I were calculating alternative allowances in the IRS's W4 worksheet.  Like many others, after a certain point I stood back astonished at how ridiculous the entire federal income tax system is.  "Allowances", "Annual Gross Income", "Marriage Status", etc.  Why on Earth should the government possess this level of information on every individual in the nation?  The wife, like many others I'd spoken to about income taxes, just shrugged her shoulders prepared to due her duty, but surely there was a time before the current status quo when people questioned the system.

I tried to put myself in the shoes of the average American in 1913, fresh from the closing of the Western frontier, freer than perhaps any working-class person in the history of any nation, and it's hard to fathom why they would allow their representatives to sell them into bondage.  Granted, the original income tax in 1913 ran from 1% to 7%,---like ACA or street drugs the income tax started out "cheap"---but before the income tax was enacted tariffs provided most of the government's revenue.  Uncoincidentally, America under its tariffs became one of the World's two great manufacturing powers, the other being the German Empire, which also implemented high tariffs.

From what I've read most Democrats seem to prefer tweaks to the existing income tax system.  Republicans make a stink about a flat income tax during election season, but when in power always seem to go silent.  The Constitution Party at least has a plan for tariffs and consumption taxes, but is such a small portion of the electorate that it is powerless to effect such a change.

Perhaps, like the Roman and Greek slaves, the American people have grown comfortable under their yokes.  The income tax has become part of our culture.  The burden is too familiar to question.
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Re: Democratic discomfort on the taxes that would actually fund their ideas

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Desert wrote: Or are our expectations of healthcare way out of whack with practicality, where we spend a huge bucket of dollars prolonging life over the final brief period?
Not just that, but e.g. patients often want antibiotics even when not indicated, x-rays/CT/MRI when they are indicated (doctors are big on this as well).
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Re: Democratic discomfort on the taxes that would actually fund their ideas

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It's hard to tell whether single payer would reduce or increase health care expenses, especially if you account for things like bankruptcies due to medical costs and services to uninsured/underinsured. 

The article didn't actually offer any specifics on the reasons for high U.S. medical spending, but I expect several of us on the forum could take some good educated guesses.  In approximately descending order of significance:

- high administrative/documentation requirements, with correspondingly high overhead costs that are far in excess of any other health care system
- high end of life spending as pointed out by desert
- high pharmaceutical costs (a factor unique to the US) and polypharmacy, related to high prevalence of obesity/metabolic syndrome but also due to "shotgun" prescribing habits, the feel-good medicines being advertised directly to the public, and a general push to "treat" everyone with preventative drugs
- increased pressure to see more and more patients per unit time, even while documentation requirements are increasing, leading to more "shotgun" medicine and less carefully considered diagnostic planning
- effects of illegal immigration (or unskilled legal immigration) - I am positive this cost is grossly underestimated, for political reasons
- defensive medicine, related to frequency of lawsuits and ridiculously large awards

Until at least some of these get fixed, the high costs are going to continue.  And I actually see these problems only getting worse.
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Re: Democratic discomfort on the taxes that would actually fund their ideas

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WiseOne wrote: It's hard to tell whether single payer would reduce or increase health care expenses, especially if you account for things like bankruptcies due to medical costs and services to uninsured/underinsured. 

The article didn't actually offer any specifics on the reasons for high U.S. medical spending, but I expect several of us on the forum could take some good educated guesses.
One of the things mentioned in that article that rang true to me concerned luxurious private room accommodations in fancy new hospital buildings. Private rooms are much more expensive than semi-private rooms or public wards, and they require more monitoring equipment too, not to mention a larger facility which accordingly costs more. I happened to read that from a private room in the maternity ward of a brand new hospital (new baby! :D Now two days old) that was outfitted with a private bathroom and a TV with HBO, and it was not hard at all to imagine the cost of all that space and luxury gets amortized into everyone's bills.

There are also some simply ridiculous billing shenanigans, too. My wife was prescribed Ibuprofen and a stool softener (sorry if that's TMI). The nurse explained that they're required to write prescriptions for these two medications even though they're over-the-counter just in case we wanted them in prescription form. My prescription medication co-pay is $20. I bought a 60-day supply of them in generic form from the pharmacy section of a nearby Walmart for a grand total of $1.76 before tax. If I wanted to, I could have paid $40 for the very same things, and I'm sure the billed cost to the insurance company would have been double that or more! Madness, I tell you. Sheer madness.
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Re: Democratic discomfort on the taxes that would actually fund their ideas

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TennPaGa wrote: Congratulations on the new baby, PS!

Out of curiosity... Did you and your wife consider a home birth?
No, we didn't. The last birth required quite a few necessary medical interventions so we figured we'd play it safe again. As it turned out, this one was completely natural--no pain medication even, since she gave birth faster than they could prepare it and had a superfast delivery! It's still good that we were in the hospital since she required some stitches. If we'd have been at home there would have been blood everywhere while we went to the hospital.
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Re: Democratic discomfort on the taxes that would actually fund their ideas

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Congratulations on the new addition to your family, PS.  Hope all is well and you all get some rest ... and even some sleep.  ;)

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Re: Democratic discomfort on the taxes that would actually fund their ideas

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Mountaineer wrote: Congratulations on the new addition to your family, PS.  Hope all is well and you all get some rest ... and even some sleep.  ;)
Congratulations to you and your wife, PS! Regarding Mountaineer's wish that you get some rest, I have seen some infants, in their strollers, wearing a t-shirt that says: "If I ain't sleepin', nobody's sleepin' "
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Re: Democratic discomfort on the taxes that would actually fund their ideas

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Pointedstick wrote:
One of the things mentioned in that article that rang true to me concerned luxurious private room accommodations in fancy new hospital buildings. Private rooms are much more expensive than semi-private rooms or public wards, and they require more monitoring equipment too, not to mention a larger facility which accordingly costs more. I happened to read that from a private room in the maternity ward of a brand new hospital (new baby! :D Now two days old) that was outfitted with a private bathroom and a TV with HBO, and it was not hard at all to imagine the cost of all that space and luxury gets amortized into everyone's bills.

There are also some simply ridiculous billing shenanigans, too. My wife was prescribed Ibuprofen and a stool softener (sorry if that's TMI). The nurse explained that they're required to write prescriptions for these two medications even though they're over-the-counter just in case we wanted them in prescription form. My prescription medication co-pay is $20. I bought a 60-day supply of them in generic form from the pharmacy section of a nearby Walmart for a grand total of $1.76 before tax. If I wanted to, I could have paid $40 for the very same things, and I'm sure the billed cost to the insurance company would have been double that or more! Madness, I tell you. Sheer madness.
This is a major reason for "medical tourism" to places like Malaysia and the Philippines (IIRC); there, you can get a private room with hot and cold running nurses for under (in some cases well under) $100/day.

Anyone who is interested in this topic should consider subscribing to "International Living" magazine, which covers this among many topics related to moving overseas either temporarily or permanently.
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Re: Democratic discomfort on the taxes that would actually fund their ideas

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Congrats on your new baby PS!!  And how did you find time to post on the forum?  THAT is dedication :-)

Space costs in hospitals are not a big deal compared to labor, supplies etc - even in Manhattan.  The biggest problem is that nurses have to travel a lot more to get to their assigned 8 patients, so I've noticed that they are often absent from a particular ward that I staff that is supposed to be monitored by nursing 24/7.  That translates to worse care (a common theme in our health care system), but probably doesn't affect the bottom line much.
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Re: Democratic discomfort on the taxes that would actually fund their ideas

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Congratulations, PS!

As far as maternity costs: we also had a private room in a new hospital with its own bathroom.  I don't know about HBO; we didn't turn on the TV.

Our insurance doesn't cover maternity, so we were self-pay for this.  The sticker price for the hospital delivery was something like $25,000.  That's what insurance gets billed (of course it's not what they actually pay).  But the cash price was something like $8,000.  And if you pay ahead of time, it's $5,000, which I believe to be the "real" price.  We went with the $5,000 option for obvious reasons.  But I think this illustrates some of the broken-ness...  And it makes me question the need for health insurance for much of anything.
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Re: Democratic discomfort on the taxes that would actually fund their ideas

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Several years ago I had to take two ambulance rides to the ER following a kidney stone attack.  :o The ambulance wasn't covered by my insurance. Weeks later, when the hospital called me on the phone to request payment, they offered me a 50% discount if I paid immediately using a debit card. I gladly accepted their offer.
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Re: Democratic discomfort on the taxes that would actually fund their ideas

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TennPaGa wrote: Congratulations on the new baby, PS!

Out of curiosity... Did you and your wife consider a home birth?
Since this thread is talking about the cost of health care... While it's been over 10 years, I recall our out of pocket cost was higher for the home birth than for a hospital birth....
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Re: Democratic discomfort on the taxes that would actually fund their ideas

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My wife and I recently had a baby, and I'm pretty sure our son would have died (and maybe my wife) if we did a home birth.
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Re: Democratic discomfort on the taxes that would actually fund their ideas

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There are some nice middle grounds available these days.  Our OB employs both obstetricians and midwives.  So normal births can generally be done by midwives, but an OB is ready to be called in at any time.  You can do a midwife birth in the hospital, or in their "birthing center", which is very much like a home birth (it's definitely a home-like environment), except that it's in the OB's office which is across the street from the hospital.
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Re: Democratic discomfort on the taxes that would actually fund their ideas

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Jack Jones wrote: My wife and I recently had a baby, and I'm pretty sure our son would have died (and maybe my wife) if we did a home birth.
Congratulations to you and your wife and P.S. and his wife.

We were considering home birth with our first child because we were in a church that was big on the idea but I'm pretty sure it would have been a catastrophe because my wife ended up needing a C-section. Being in the hospital didn't insure things would go perfectly however. When she had the second one they botched the anesthetic and she ended up having a C-section without anesthetic because they didn't realize it didn't take until the procedure was well underway. Being Christians who believed in forgiveness at the time we didn't sue but if I had it to do over I would sue the hell out of them. The third and final one wanted to come early and my wife spent 52 days in and out of the hospital to prevent it. Fortunately, I had insurance for that one. I did not have insurance for the first two. I remember it only being a few thousand dollars but this was well before the turn of the century and still a lot of money. I don't remember what the insurance was billed for the third one but I suspect it was a lot more than the $25k I've heard about here in inflation adjusted dollars.
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Re: Democratic discomfort on the taxes that would actually fund their ideas

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The birthing rooms at hospitals or doctor's offices seem like a very good idea to me, combining the more pleasant environment of a home birth with the easy availability of medical professionals if needed.
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Re: Democratic discomfort on the taxes that would actually fund their ideas

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Fred wrote: Congratulations to you and your wife and P.S. and his wife.
Thank you!

Yeah the hospital experience was rather unpleasant, but having our baby's life saved by a team of pediatricians was worth a couple days of being uncomfortable in a hospital.
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Re: Democratic discomfort on the taxes that would actually fund their ideas

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Jack Jones wrote:
Fred wrote: Congratulations to you and your wife and P.S. and his wife.
Thank you!

Yeah the hospital experience was rather unpleasant, but having our baby's life saved by a team of pediatricians was worth a couple days of being uncomfortable in a hospital.
My wife and I had basically the same experience the first time around. We were very grateful to already be in a big building full of medical professionals. A totally natural birth is a really amazing thing--we got one this time--but the stars have to align, and let's face it, childbirth can be dangerous. Before modern medicine, the infant and mother mortality rate in childbirth were vastly higher. I suppose in a few million years, this selection pressure would probably produce babies more suited to being born and mothers more suited to bearing them, but on a micro level, I'm happy. :)
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Re: Democratic discomfort on the taxes that would actually fund their ideas

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Libertarian666 wrote: Actually, in a few thousand years of modern medicine, the baby's heads might be even bigger. Assuming that allows them to be more intelligent and therefore survive better given intervention to get them out alive via a C-section, evolution doesn't care that they need to be surgically extracted...
Seems to me that the intelligent tend to have less babies though.
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