perfidy

There's some good coverage of the growing air tanker scandal over on Aero News. It seems that Boeing rewrote the requirements, with the complicity of certain officers, to assure themselves a win on the tanker bid. In fact, Boeing was unable to accomodate 19 of the 26 requirements, so they had them eliminated from the RFP. Airbus (that evil French company) met 20 of the original 26 requirements.

The only reason that we know about this is that Boeing made the mistake of hiring former Assistant Undersecretary Darleen Druyun too fast, making her a vice president. That got people curious, and they discovered the following email during the investigation:

Boeing's man in charge of the tanker deal, Bob Gower, wrote in an email during the five month rewrite, "Meeting today on price was very good. Darleen (Druyun, then still an Air Force official) spent most of the time bringing the USAF price up to our number. ... It was a good day. She may be running her own covert operation on this one, so we probably don't want to discuss openly."

Isn't that interesting?

According to the New York Times, an officially secret agreement exists between the Scientologists and the IRS which allows members of the "Church" of Scientology-- and only that "church"-- to deduct the costs of educating children at "C"of S schools from their taxes. No other religious-schooling costs may be claimed on tax returns.

This fact only came to light when a Jewish couple claimed tax deductions for the education of their five children at Jewish schools, only to recieve a letter from the IRS denying their claim because their reciepts did not come from the Scientologists. Oops! Secret's out!

So far, both the IRS and the Creeps of Scientology have quashed subpoena requests to see this agreement, but it's only a matter of time. This is going to get weird, and after that it's going to get ugly.

Just how corrupt is our government, and just how sinister are the Scientologists?

(thanks to Marginal Revolution for the original pointer.)

Michelle Leder has a good story at Slate about the new revolution in corporate reporting. Many companies have (wisely) jettisoned the content-free and expensively glossy annual report, instead choosing to just mail their 10-Ks to investors (10-Ks are a warts-and-all report filed with the SEC). At the same time, many companies are throwing everything into the 10-K-- every dubious consulting contract, every golden parachute, every ludicrous perk-- in an effort to show how transparently forthright and upstanding they are, our good corporate citizens of America.

Leder points out the benefit for us investors-- for those of us with strong eyes and time to kill, the footnotes to these new beefy 10-Ks make for fascinating reading.

After all, corporate crime is often a matter of degree, not transgression. At what point does strategically socking funds away in a Cayman subsidiary to ensure liquidity in a currency crisis become strategically socking specific funds away in a Cayman subsidiary for limited periods to duck out on paying US taxes? It's all in the footnotes, kids. All in the footnotes.

[wik] Speak of the devil! Also in Slate, Daniel Gross tells us why private company jets are gateways to corporate, um, perfidy. There's a whiff of anti-privelige sentiment in the piece, but why shouldn't there be, given the premise?

A while back, Ross posted a graph taken from a Paul Krugman article, and used this as a stick to beat up on the Bush administration. I have nothing in principle against beating up on the administration, but at the time I read Ross' post, it didn't seem quite right to me. Not being a super economic wiz, I couldn't put my finger on it, nor did I have to hand the references that would have helped. But, coming belatedly to the rescue are the economic genii at Marginal Revolution. (Of course, the belatedness of the rescue is entirely my fault for falling behind on my blog reading.)

This is the original graph, from Krugman:

Ross claimed that this must be evidence of gross incompetance, or of lying. There is a third option, though. Marginal Revolution gives another chart, with a larger timeframe:

MR contributor Alex Tabarrok says:

With this graph it becomes clear that the CEA has in essence been predicting a return to trend. Obviously, the CEA has been wrong, employment has not returned to trend, but that surely tells us more about the peculiar nature of this recession than it does about corruption at the CEA.

Has political progaganda taken the place of professional analysis? Indeed.

Remember to go to Marginal Revolution for all your economic needs.

Deficit Study Disputes Role of Economy

When President Bush and his advisers talk about the widening federal budget deficit, they usually place part of the blame on economic shocks ranging from the recession of 2001 to the terrorist attacks that year.

But a report released on Monday by the nonpartisan Congressional Budget Office estimated that economic weakness would account for only 6 percent of a budget shortfall that could reach a record $500 billion this year.Next year, the agency predicted, faster economic growth will actually increase tax revenues even as the deficit remains at a relatively high level of $374 billion.

The new numbers confirm what many analysts have predicted for some time: that budget deficits in the decade ahead will stem less from the lingering effects of the downturn and much more from rising government spending and progressively deeper tax cuts.

Anybody else as shocked and confused by this turn of events as I am?

So it turns out I wasn't imagining things. My fair state of Massachusetts shed jobs faster than any other since 2001. Guess when I moved here? Guess how long Goodwife Two-Cents has been looking for a full-time job? Guess where we're thinking of moving out of?

Just another bit of the scintillating glory that is the Bay State. It's a matter of tradeoffs. Want salt air, quaint villages, colonial houses, fried full-belly clams, polo matches open to the public on Sundays, a plethora of organic farms, the best Universities in the world, Moxie, Sky Bars, and cod fresh of the boat? You got it! Want miserably corrupt state politics, miserably corrupt local politics, bad roads, terrible signage, crumbling infrastructure, job loss, a cultural divide, meaningless traditions, outrageous local pollution, a cost of living higher than almost any other, and a yearly crop of the products of the best Universities in the world willing to work for much less than you? Well, ya got that too! Enjoy, sucker!

There may be some proof that Microsoft is behind SCO's recent raising of capital. SCO has been trying to suppress Linux usage through a series of highly doubtful IP lawsuits. But...a while back they were suddenly funded to the tune of $50 million. There is nothing that this company can conceivably do that merits that money, so many of us have been wondering about the thinking.

"I realize the last negotiations are not as much fun, but Microsoft will have brough in $86 million for us including Baystar. The next deal we should be able to get from $16-20, but it will be brutial as it is for
go to makerket work and some licences. I know we can do this , if everyone stays on board and still wants to do a deal. I just want to get this deal and move away from corp dev and out into the marketing andfield dollars....In this market we can get $3-5 million in incremental deals and not have to go through the gauntlet which will get tougher next week with the SR VP's."

If this memo is true, it all makes sense. The $50 million was nothing to Microsoft, who wants Linux damaged. The investors who supplied it are...not interested in their investment...

Is this anti-trust? Will this White House investigate Microsoft?

Sooner or later we're going to run out of cheap oil. There's plenty of disagreement about when that's going to happen. Ingenious humans will do clever battle with oil fields to pull more out; that pattern has already repeated. Still...the US was the world's premiere oil supplier until the 1950s, when the Hubbert Peak was reached. Domestic oil production is significant, but has declined substantially. The energy profit in the US has dwindled substantially.

Oil currently supplies around 85% of the world's energy needs. That's far too high, and we need to be doing something about it. The reason we need to start now is that if we do, we'll be able to soften the blow when oil starts getting more expensive. Estimates on when oil prices will increase substantially range from 2007 to about 2020, which provides us with a rough time frame.

Energy itself is not a problem. Solar energy provides everything we could ever use; its most convenient manifestation is wind. Hydroelectric power is also derived from sunlight (water becomes vapor, is carried by wind to mountains, flows down mountains). Gravity provides tidal forces, which can be used to generate rather incredible amounts of energy.

The price of wind power has dropped dramatically in the last two decades; at the same time, the efficiency of the equipment has risen steadily. We can now seriously consider wind as a legitimate alternative to other sources on a cost basis. We're not quite there yet, but with increases in oil price we won't be that far off. A generator/tower/battery system that can easily power an entire home (or ranch, for that matter) costs about $13,000 these days. When compared to the cost of a house, this is a small cost. On certain power grids, you can even sell excess power back to the utility grid...under those situations the grid acts as your storage device. You push power back into the grid when you have too much. The grid can shift this power to where it's needed. When you don't have enough, you can pull.

Hydroelectric-capable watersheds in the US are largely exploited at this point, but are capable of delivering a pretty large amount of power. We do pay a price in environmental terms for this, but maybe that price is acceptable.

Tidal forces are particularly power, yielding an energy profit of at least 15 to 1 (for each unit of energy expended to collect, you yield back 15). Tidal is capital intensive, but incredibly clean and possesses almost unlimited capacity.

Since I'm Canadian, I'll point out that Canada's hydroelectric watershed is mostly untapped, and is capable of generating far more power than the population could ever use. Likewise, we could turn most of the northern parts of our provinces into giant wind generating farms and nobody would notice. The Bay of Fundy is the world's premiere site for tidal generation; with tides in excess of 50 feet every six hours (due to the Bay's length matching the resonant frequency of global tidal patterns) the amount of energy being generated by the bay on a continous basis could supply all energy we need on the continent, if we could collect and transmit it. So Canada is good. ;)

The thing is, let's say there's effectively no oil. We can create plenty of electricity, though. Farms will need to convert their machinery to use electric engines. In fact, just about everything is going to have to convert to be that way. Suburban sprawl is going to be more of a necessity, because homeowners will want to have their own generators. Each house might end up having two or three large generators, possibly generating around 10 kilowatts or more a day, feeding into a battery bank. This overcapacity can be used to charge up the family vehicles; we can anticipate improvements in battery technology that will greatly extend the range of electric vehicles.

We've seen market corrections at work over the past couple of years. The market corrects very harshly. Can we not use a little foresight here and soften this particular landing? Can we not use our government to guide technology development and infrastructure development in the right direction? If the economy must absorb the shock of increasing oil prices, we need to spread that shock out across the biggest stretch of time possible.

We also have a tremendous opportunity to become world leaders in all of these technologies. The long view depends on it.

As part of my cunning plan to become the next Donald Trump, I now have a townhouse to rent. Anyone in the DC metro area who is looking for a place to live, I have for your consideration a three bedroom, two and a half bath townhouse. It has a finished basement; washer and dyer, dishwasher, and new refrigerator; and a fenced-in brick patio. It's in Springfield, Virginia in the Newington Forest area, and is a nice brick faced townhouse located on a cul-de-sac. It's very convenient to the Metro, being right off the Fairfax County Parkway five minutes from Franconia Metro on the Blue Line. All this for $1650 per month. If you're interested, send me an email at [email]rent@perfidy.org[/email].

Since nobody gets my quantum cat box gay marriage riff, I'll explain something else.

Poor and middle class people in this country have been told that we need to give a large tax cut to the wealthiest 1% of people in this country. The reason, we are told, is that this will produce expansion in the economy. This, in turn, will create more jobs, raise the incomes of everyone, and just generally make everything turn out super.

Yesterday a one of my colleagues asked a question about taxes. We pulled out a spreadsheet and calculated roughly how much he's paid in social security taxes over his career of seven years (he's not yet thirty). We calculated that he has paid roughly $78,000 in social security taxes in that time. Seems like quite a lot, doesn't it? We are including, of course, both sides of the social security puzzle -- employer paid and employee paid taxes. If the employer was not paying these taxes, they could (and would) be given to the employee as wages.

At this point is is useful to note that the tax cuts for the wealthy are being financed by removing money from the social security surplus. Very large parts of my everyone's social security payments are diverted into the general fund. The general fund is operating at a huge deficit.

Is my colleague better off holding a promise to pay social security from the federal government, approximately valued at $0 and a promise by the GOP that the improving economy will help him out? Or would he be better off with his $78,000?

Any potential benefit to the poor and middle class derived from ephemeral supply-side effects is dwarfed by the tax theft this country is currently engaged in.

The social security taxes apply massive pressure against poor and middle class income mobility. Without being able to save this money and develop some capital of their own, they are forever trapped in a paycheck to paycheck existence, and forced to be wage earners.

When we give massive tax cuts to the wealthy, we do tremendous damage to the hopes and dreams of the other 99% of Americans, who can't save enough to make changes in their lives.

A corporation runs a pension plan for twenty years, and manages the assets in the trust fund. The workers have contributed 15% of their paychecks to this fund, on the understanding that it will be used for their retirements. The officers of the company "borrow" money from the trust and use it to finance general operations of the company and give themselves massive pay increases. They leave an IOU, signed and stamped and gold-starred.

In the private world, we would prosecute. We would call this theft. Or at least we would have, before the GOP congress of 1998 got its hands on the IRS, prevented them from investigating corporate fraud, and told them to go after earned income tax errors instead, so they can extract dozens of dollars from maids who make $6,000 a year.

Yes, it's time for reality vs. Bush, Episode MXVCVIIIMCII.

Speaking on his tax cuts for the top bracket, El Bush pontificates thusly (if mangled words can be considered such):

"If you're worried about job growth, it seems like it makes sense to give a little fuel to those who create jobs, the small-business sector," Bush told a gathering of the nation's governors at the White House. "So I'll vigorously defend the permanency of the tax cuts, not only for the sake of the economy, but for the sake of the entrepreneurial spirit."

Internal Revenue Service statistics cited by a Democratic senator this month show that the vast majority of small businesses do not earn nearly enough money to fall into the highest income tax bracket. According to IRS data from the 2001 tax year, 3.8 percent of the 18.2 million business tax returns filed that year reported taxable income of $200,000 or more. The top tax bracket last year kicked in at $311,950 of taxable income.

So -- yeah, the estate tax helps farmers, except nobody can identify a single farm that's been saved. And the top bracket tax cut helps small business, except according to the IRS data, it doesn't.

Exactly how much more of this bullshit are the reasonable people in this country going to put up with?

If the man's judgement is this badly impaired (either by lack of capacity or poor information delivery), why exactly do many "conservative" people in this country think he's so damn qualified to prosecute the war against terrorism?

Bush is a walking misjudgement.

Damn, that better be a word. It's frickin' late, I've just put in a 15 hour day, and I'm wiped. I get a free one here. Little blinky lights everywhere are telling me to pay attention to the outside world. Maybe they're floaty spots.

Oh yeah, almost forgot: Since the tax cut thing didn't work out and all it did was make a bunch of GOP political donors even more ridiculously wealthy, can we have the money back?

Right. And when we put the tax rates back after November, they'll bitch, bitch, bitch about the fact that the rich are being singled out for a tax hike.

The Post has given us an essential timeline on the Bush "tax cuts", the effects that were promised at the time, and what we've seen.

Bush and his "economic team" perform about as well as psychics at a county fair.

Before you raise the chorus of terrorism, war, and recession, keep in mind that these predictions were made after those things happened.

Here are some helpful mathematic elements for your consideration:

Today's debt as % of GDP : ~40%.
Historical high debt as % of GDP: ~50%.
Bush Debt as % of GDP: 6%/year.

Dick Cheney tells us that worldwide oil consumption is increasing at 3% a year, and reserves are decreasing by 2% a year. He should know.

Taxes lost to cheaters, every year: ~$300 Billion ($1000 for every man, woman and child in the country).

Odds of being audited if your income is less than 15k/year: 1 in 47.
Odds of being audited if your income is more than 100k/year: 1 in 66.

Amount stolen from working class people's social security fund to give tax cuts to the wealthiest, since 1983: $1.7 Trillion.

Ratio of Americans who pay more in social security taxes than they do in federal income taxes: 3/4.

Income rise in constant dollars since 1972, bottom 99%: 4%.
Income rise in constant dollars since 1972, top 1%: 500%.

Amount of income working class Americans can save, tax-free, per year: about $12,000.
Amount a public corporation officer can save, due to a loophole in the law: Unlimited, as deferred income.

Number of penalties assessed against American corporations for cheating on taxes in 1993: 2,400.
Number of penalties assessed against American corporations for cheating on taxes in 2002: 22.

Number of offshore credit cards issued to American citizens: somewhere between 1 and 2 million. Estimated tax cheating: around $70 Billion loss.

US trade deficit, 2003: $489 Billion.

Number of farms lost in the last 20 years to estate taxes: 0.

Purchase price of a data series from the IRS, so a concerned taxpayer can do his OWN analysis of the tax system: $3300, for one copied CD-ROM.

It's just about 2:30 in the morning and I've just wrapped up another 16 hour work day. That's typical in the world of small companies, these days. Cash is hard to come by; I can tell you that my personal productivity factor is way up (rising productivity means GDP gains without additional employment).

Naturally I need to be pissed about politics before I go to sleep, so here's the thought of the night:

Lower tax rates are given to capital gains income because (supposedly) the money saved is re-invested into the economy, creating more jobs and more wealth. When we lower capital tax rates, we raise taxes elsewhere to compensate; these higher taxes are applied to the working class, which is pretty much everyone making under $250,000 or so.

We have seen a dramatic rise in direct investment; the GOP trumpet continuously about the ever-growing number of shareholders.

So if everyday folks are getting into the investment game, which should we be raising their taxes and handing that money to the very richest amongst us? If Joe Everyman is investing, like he apparently is, I really don't see why we don't just let him keep a little more of his money. He's going to invest it anyways, just like Thaddeus Q. Gatesfeller the IIIrd. And I'll tell you another thing: Joe Everyman isn't going to cheat on his taxes, or spend huge sums on legal fees just trying to avoid paying taxes.

Seems to me that the tax cuts for the rich come at additional cost to everyone else. And they aren't designed to increase investment; that would have happened anyway, with direct investing and 401k plans. Because he has to pay higher taxes to subsidize the truly wealthy, our Joe just doesn't have much of a chance of ever developing much wealth on his own. After all, his real income has only risen by 4% in constant dollars since 1972. Thaddeus has seen his wealth rise in that time frame by over 500%. Yes, that's five hundred percent. Trickle-down is working for someone...

So why are we screwing over the finances of this country and most people who live in it?

With any luck I'll have the time to write a long post on the subject. When it comes to running a civil society, much of it boils down to how we handle taxes. We'd all pretty much agree that some level of taxation is necessary...and we'd all agree that paying less is a good thing, and having government do less is a good thing.

I've been studying taxation and incomes. There are some pretty astonishing facts that you rapidly become aware of:

- three quarters of American families pay more in social security taxes than they do in income tax
- the total tax paid must be taken into account (income, medicaid/medicare, social security), and that's federal stuff
- inflation-adjusted income since 1970 has risen only 4% for the bottom 99%
- inflation-adjusted income since 1970 for the bottom 80% of earners has actually fallen slightly
- inflation-adjusted income since 1970 for the top 0.01% of earners has risen by over 400%
- tax burdens as a percentage of income are roughly equal, at all income levels; the rich do NOT pay more taxes as a percentage of income
- tax cuts for the rich are financed with social security revenues, which are exclusively collected from the poor and middle class
- repeals of inheritance tax were pitched as "save the farm"; there has not been one documented instance in the last 20 years of a farm being lost due to the inheritance tax.
- AMT is going to be a huge problem in a few years, because its formulas are not adjusted for inflation. AMT works by denying deductions; you cannot take a deduction for having a child, for example. The basic AMT deductions haven't increased; as such dramatically more people are subject to it. Bush could have used tax cuts to free middle class families from AMT, but he didn't...

Until you're in the top 1% of earners in the country, you haven't seen any real income increase in 1970 dollars.

How do the rising deficit, deficits as a percentage of GDP, and revenue projections all factor into this? Very badly, of course.

But not if you're at the very top...everything is fabulous. You've gotten the best tax legislation money can buy...

A couple links to Marginal Revolution: first, an exceedingly brief post, which I will quote in full:

In 1960 Taiwan was poorer than the Congo, here is the source.

Second, some thoughts on the just released Economic Report of the President.

The second post gives us some useful information on the whole economy thingy. Read it and we'll talk. But what really snagged my attention was the first one. I remember from when I actually read books and went to school; that at one time, as decolonialization was getting into full swing, everyone thought that Africa was the next best thing, soon to take advantage of all that brilliant and useful socialism and make the Dark Continent into the worker's paradise. Asia, on the other hand, was believed destined for misery and poverty.

Well, that sure happened. And the key, really, is this:

The Index of Economic Freedom

The prescription drug benefit will cost $540 billion instead of the $400 billion we were promised. I didn't see that coming.

The Heritage Foundation recently released a study on Poverty in America. This study provides some welcome perspective on the issue of poverty. The study contains some interesting statistics and what not, and is well worth reading.

The underlying issue is the confusion between absolute poverty and relative poverty. Absolute poverty is what most of us think of when the word poverty is mentioned. People going hungry because they don't have enough money for food. Homelessness, evictions, ramshackle housing, or overcrowded tenements. The sort of thing that involves real suffering. Relative poverty is making less than other people, but nevertheless having sufficient money for housing, utilities, food, and other needs.

The government defines poverty in relative terms - most of the bottom quintile of income is by definition poor. But as the Heritage study indicates, most of these people are not poor in the traditional sense of the word. They have homes, cars, air conditioning, plenty of food and health care. They have tvs, vcrs, cable and other luxuries. The average poor person in America lives better than the average citizen almost anywhere else in the world. We need, really, to distinguish between the two.

Jesus said the poor we shall always have with us - and as long as we define "poor" as the bottom fifth of incomes, we always will.

Some people will always make less than others. Where we need to make the effort to ameliorate poverty is with the less than one third (possibly much less) of the government defined poor who actually suffer from a significant amount of absolute poverty.

I saw this report on the news Saturday evening, and was struck by the comments of the man (I didn't catch his name or what group he was with) who was interviewed to counterpoint the Heritage position. He expressed considerable disdain for the authors of the study, and suggested that they should walk the streets of the poor parts of our cities and see whether or not real poverty existed in this country. (Obviously, if they did so, they would see the light and immediately endorse any number of Democratic entitlement programs.) But that was not the conclusion of the study - not that there are no poor people in this country, but that the numbers are far smaller than some would claim if we are careful and honest in our definition of the word "poor."

A good while back, my compatriot Ross posed the question of why do we become conservative or liberal? Every now and again, I pull that question out of its cage and smack it around a bit. That study makes sense to me. Based on my own experience and on my expectations of both how the world works and how I think it should work. I was poor twice in my life. Once because I was the child of a single mother when I was young, and again in my twenties because I was young, unskilled, and far more interested in beer than regular, gainful employment.

We are a rich soceity; we can and should help the poor. But should I have been helped on either of the two occasions when I was poor? No, because I don't think we deserved the help. My mother and I made it, though things were often tight. She worked two jobs, and sometimes we rolled pennies at the end of the month. But Mom managed to save enough to buy a house by the time I was eight - five years after my parents separated. (Dad helped with the child support, too.)

What about the second time? Hell no. Once I laid off the intoxicants and the gave up my aversion to work, things swiftly turned around. My parents actually delayed this by helping me far too often out of corners I painted myself into.

With sound personal fiscal policy and a realistic appraisal of how much standard of living you can afford almost anyone with any income at all can meet all basic requirements for life, and live comfortably if not exactly in the catbird seat. Barring major upheavals, this can be maintained indefinitely. Those people do not need the government's assistance. They should fend for themselves because that is what freedom and personal responsibility call for.

I think people have a responsibility to look after themselves. Freedom also means the freedom to screw up your life, make poor life choices, and have a low income. The relative poor get my sympathy, but not my endorsement for dipping into the public purse. The absolute poor are a different story. If things have really gone balls up, charity demands that we help. If that charity is through the government, so be it. It is misguided to attempt to help those who no one in the history of the planet up until the last half century would have called anything but rich. A waste of money and effort that could be used to help the actual poor, or accomplish other worthy goals.

The National Taxpayer's Union has released a study of the the Democratic candidates' fiscal policy statements which reveals that all of the candidates would significantly increase deficits, even counting the offset produced by repealing President Bush's tax cuts.

The NTUF study systematically examined the fiscal policy implications of the eight contenders' agendas, using campaign and third-party sources (like the Congressional Budget Office) to assign a cost to each budget proposal offered by the candidates. For actual legislation that the candidates have endorsed, the study also relies on NTUF's BillTally project, a computerized accounting system that has, since 1991, tabulated the cost or savings of every piece of legislation introduced in Congress with a net annual impact of $1 million or more. Highlights of the study include:

• If the policy agenda of any one of the eight candidates were enacted in full, annual federal spending would rise by at least $169.6 billion (Lieberman) and as much as $1.33 trillion (Sharpton). This would translate to a yearly budget hike of between 7.6% and 59.5%.
• All candidates offer platforms that call for more spending than would be offset by repealing the Bush tax cuts (using even generous estimates of the tax cuts' impact).
• The eight candidates have proposed over 200 ideas to increase federal spending, and only two that would cut federal spending. Those two proposals have been offered by Dennis Kucinich (thus, the seven other candidates haven't made a single proposal to cut any spending).

...George W. Bush, who campaigned as a fiscal conservative in 2000, has presided over a jump in federal spending of 23.7% since taking office. Yet, Johnson still found that even the most parsimonious of the Democrat Presidential candidates would have outpaced the spending run-up under Bush by 15%.

I've always found it amusing when Democrats criticize Bush for spending profligacy - not because they're wrong, but because of the deep pot-kettle-blackism of the exercize.

Over in the comments, I have been getting back in the game as it were, reentering the great game of blogging.

Ross made the perceptive comment that Social Security taxes and payroll taxes are way too high. (Of course, all taxes are way too high...) And also that the burden of these taxes falls largely on the the lower reaches of the income scale. When you add income and payroll taxes together, according to Ross' numbers it means that we already have, effectively, a flat tax.

Ross, being a liberal, draws exactly the wrong conclusions from this insight. (Ross, I don't think an unbiased observer would include you in "us poor folks" any more than me, or even Johno for that matter.)

So, the various income groups in this country end up paying about the same percentage of their income to the government - just under a third. That's sick. It's even more sick when you realize that that percentage only includes direct taxes on income. Both the rich and the poor pay significantly more than that. The rich get nailed on investment taxes, and on luxury taxes. The poor get nailed on FICA, sales taxes and sin taxes. Everyone gets nailed on taxes on corporations that affect the costs of goods and services. It is not an exaggeration to say that most Americans pay somewhere around half of their income in taxes to the government. Only the very rich and the very poor escape this.

Ross says:

Super-kean-fine, government revenue needs to drop. I say we start with the folks at the bottom.

No, we reduce taxes for everyone. Nothing else is fair. No one deserves to have their tax burden completely relieved while others continue to pay. We are all citizens.

Elections are bought and paid for by people in the top income brackets. Explain to me why they shouldn't be responsible for most of the bills when they come due.

First, because that's not true. And second, we're all citizens, equal under the law.

As outlined in the posting, we already have a flat tax system when you take the social security system into account. Poor folks pay it, rich folks don't.

Yes, but a singularly stupid, Byzantine and labor intensive flat tax that has uncounted loopholes, exceptions and complicated rules. A flat tax system that wastes millions of man hours and probably billions of dollars in compliance costs. If it actually was a 30% flat tax, it would be a reasonable law with the rate set too high.

Bottom line is, you either favor a progressive system of taxation or you don't. Right now we use what is effectively a flat tax system, but we pretend it's progressive.

Only the mildest from of progressive (regressive) taxation is acceptable. Parts of the current tax structure are flat taxes, parts are not. The complexity of the system is one of its greatest flaws.

So you don't have a problem with a guy making 25k a year paying 5k in federal taxes, while a guy making 100k a year pays 20k?

That 5k means everything to the guy making 25k a year. He can't afford a damn thing in his life. You either think that's a situation that should be addressed, or you don't.

No, I don't. The $500k guy makes five times as much, pays five times as much. That's fair. If, every time anyone in this country earns a fiver, he gives one dollar to the government, that's fair. Naturally, the people who earn more will pay more. You can't say, "but that other guy really, really needs it." I really need that $20k. It's not exactly chickenfeed to me, or to you. However, I am willing to largely relieve him of the burden of paying taxes, so long as he follows exactly the same rules as me.

One other thing -- GOP loves to talk about distributing the "burden" of taxes. How about the distribution of "pain" in an economy like this one? Do you think the pain of a shit economy should be evenly distributed too?

Despite much wailing, the economy even in the recent recession was not bad by historical standards. And it is not right to hit someone in the head just because the guy next to him has a headache.

I have never argued that everyone should pay the same amount of taxes, merely that the rules should be uniform and simple. In a just society, the same rules apply to everyone. This includes taxation. If someone making $50k pays 20%, and someone making $1m pays 20%, that's fair. Seeing as all the SS revenue goes into the general fund anyway, it should be eliminated. Sales taxes should never be deployed on a Federal level, as they are a little too regressive even for me.

One Federal tax for individuals. Flat rate, 20% or less, with deductions for yourself, spouse, children, mortgage interest and any money put into savings like 401k. Same rules for everyone, but the deductions would benefit the lower income earners proportionally more. Fair, but would not penalize marriage or homeownership, or investment. And when you factor in the deductions I mentioned, the lowest income earners would pay a lower effective percentage.

If I was only paying $20k in taxes, it would be an extra $20k in my pocket. I could do a lot with that. You'd want to structure the deductions to more or less zero out the taxes of those making less than about 25k. Though no one should pay no taxes, there should be a limit - even as low as a couple hundred dollars - but everyone should pay. But, for the guy making $500k, those same deductions would effect his tax burden much less proportionally. He'd actually be paying close to the 20%.

And in any event, fairness, to me, is largely based on being under the same rules. In a game of basketball, fairly refereed, I would get my ass kicked by Michael Jordan. That doesn't mean I'm being discriminated against, screwed by the system, or otherwise abused. And, to bring in another point I raised in the comments to another post, the tax withholding system has got to go. The tax-withholding scheme is the only thing that keeps us from a revolution. It was implemented in WWII as a means for getting money into the war machine more efficiently. But its primary effect has been to confuse the public on the nature of the effect of taxation. Instead of writing a check to the government for taxes every year or even every quarter, many people get the delicious feeling of receiving a big check from the treasury, like the Treasury is the fairy godmother or something.

Even though I know how terribly much I give to the gubmint, on an emotional level I'm still thinking, "Cool, $800!" It is the government giving back some of the money it took -without even paying me interest.

It makes the tax process relatively painless. But it shouldn't be, as a practical matter. Writing a check for 30% of your income on April 15 would wake most people up to the reality of taxation. Even for those on the lower end of the scale, that's likely larger than any check they've ever written before. It's easy to approve of government plans to spend money when it's spending money that you never had any real perception of having, since it was never in your bank account, never earned you interest, etc.

The central fact is that it is wrong to pay half your income in taxes. It is wrong that we have this completely fubared tax system that takes even intelligent non-tax attorneys or CPAs hours of skull sweat and worry to comply with. It is wrong that the IRS can screw with your life, and the burden of proof is on you, not the government. You have to prove your innocence! And because the tax code is some complex, it is easy for self serving lobbyists and politicians to fiddle with it for their own purposes. Sick, sick, sick, all of it.

We cannot legislate equality, and it is foolish to attempt it. Especially with the tax code. The most we can hope for is to create a fair system, where everyone has to obey the same rules, and let them have at it. Some, due to hard-won skills or God given talents, will do well, and make millions. Others, due to lack of foresight, deficit of ambition, or lower than average intelligence will do less well. Some people will manage to do both. So let it be. Take a buck out of every five they make, whether they're going up the scale or down.

The Bush economic juggernaut continues to roll right over everyone not directly connected to the GOP gravy train. See this WashPost article for reference.

So what happened last month? All the GDP growth produced...1000 jobs in December. Meanwhile, another 300,000 people stopped looking for work. So while the unemployment rate has "fallen", the far more important employment to population ratio is getting worse and worse.

We'll have to see what happens over the next few months.

Weak holiday hiring by retailers was to blame for holding back job gains. Analysts were surprised by the anemic job growth because they expecting companies to add 100,000 to 150,000 jobs to their payrolls last month. But the net gain was just 1,000 jobs -- which is "quite shocking," Cheney said. "I would certainly have not expected anything resembling that."

Cheney's shocked, huh? What the heck? Maybe the economy isn't quite as simple as tax cut in, standard of living up. Unless you're in that tip-top 1% or so, in which case you can't figure out which BMW or Mercedes you're going to spend your extra cash on (and it will take a lot of extra cash, 'cause the dollar has dropped by 25% versus the Euro).

There's a decided muting to the crowing of GOP cheerleaders...they're all happy about the GDP growth...but where are the jobs?

Oh yeah. They're overseas. And income mobility? Disappearing faster than Powell's "hard evidence" of WMD in Iraq. Raise taxes on the poor, decrease them on the wealthy...what's the effect of that? You prevent regular folks from ever saving up enough money to start their own businesses, and you lock into place the class hierarchy that's becoming increasingly evident in this society.

If you're in Bush's GOP elite, that's precisely what you want. And you're getting it, in spades.