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Politics : Actual left/right wing discussion -- Ignore unavailable to you. Want to Upgrade?

To: JeffA who wrote (945)	9/15/2006 1:56:51 PM
From: TimF	Respond to of 10087

I am for term limits I used to be against, now I'm on the fence. abolition of the golden retirement net for those who have served Can you provide more detail about what you want abolished. Almost every Senator will retire a millionaire. Many of them are millionaires going in.

To: JeffA who wrote (945)	12/10/2010 9:20:06 PM
From: TimF	Respond to of 10087

Does the U.S. Government Increase or Decrease Income Inequality? Bryan Caplan The view that the U.S. government actually increases income inequality used to be limited to (some) libertarians and socialists. After the bailouts of 2008 and beyond, though, even moderates might start to wonder. Where does the truth lie? Please show your work. econlog.econlib.org David Friedman writes: I don't think it's practical to give a solid empirical answer to the question, but the pattern of poverty rates is at least suggestive. From WWII to the start of the War on Poverty, they were declining pretty steeply. From the point when the War on Poverty got really going--programs fully funded--it's been roughly constant, going up and down with economic conditions. econlog.econlib.org Peter H writes: Main arguments that Gov't decreases inequality: progressive taxation and cash/in kind benefits to the poor. I would argue that the current tax and benefit system (disregarding the bailouts entirely) increases nominal inequality, that is, increases inequality of baseline income, by strongly disincentiveizing people from gaining hihger paying work, due to astronomical implicit marginal tax rates in the $20,000 to $50,000 range. Let's begin with non-implicit marginal tax rates. At 20,000 (about $10 an hr full time), a single person will be in the 15% bracket, which means a marginal federal rate of 30.3% (15% income, 15.3% FICA) assuming standard deduction. Add on state taxes for my home state and you get a 36.2% marginal tax rate. Let's assume a householder with some kids though, and although the nominal tax rate will drop to 31.2% (down to the 10% bracket), the implicit rate will be much higher. NY for example has a medicaid cutoff at about $12,000 for a family of 3, but provides a 50% subsidy to health insurance thereafter. The cheapest 50% off parent+children plan is $525/month (NY has guaranteed issue and community rating, so our rates are extremely high). The 50% subsidy lasts until an income of about $45k for a family of 3. So over the period $10,000 to $15,000, the implicit marginal tax rate is well over 100%, since you lose medicaid, and instead would have to pay $6300 to replace it with subsidized coverage, plus pay taxes on the new income. Then there's the EITC, SNAP, TANF, and a host of other things that make for very high implicit marginal tax rates in the lower-income areas. People respond to these incentives, and will often seek off the books work or else not work, since they will lose more than they gain. The government has not taken a wholistic approach to the social safety net, and has therefore created a system that punishes people who try to move up by stripping them of benefits at a faster rate than their incomes rise. econlog.econlib.org Sonic Charmer writes: The main things the government does to affect income are regulation/taxation (which create barriers to entry, both for businesses and for employees), and welfare of various kinds (which create dependence and reduce incentives for intiative). Both serve to increase income inequality. The biggest effect is probably just the concentrative power of the government, in a society that gets bigger and wealthier but remains overseen from one swampy city by 435 congressmen, 100 senators, one "President", etc. and all their hangers-on. The government-teat and similar effects create rent-seeking income opportunities for the well-connected elites, and this factor alone would increase inequality even if all else were equal (i.e. the government weren't busy creating barriers to entry and perpetual dependence in the process). Which it isn't. In short: the answer is, increase. econlog.econlib.org Troy Camplin writes: The question is U.S. government, not generic government involvement (which can erase differences by making everyone poorer). The U.S. government creates increased wealth disparity through subsidies. The subsidies typically go to larger corporations, but come from individuals and small businesses. More than that, various protectionist laws, barriers to entry, etc. also benefit the already-rich at the expense of those who want to enter into the market. Government regulations create oligopic markets -- one can think of the Big Three auto makers. One would expect exactly such a situation in a pro-business, anti-market political economy. econlog.econlib.org