Political Roundtable Cosmic String of Cataclysm - Part V

[nate33]

Continued from here:

[Zonkerbl]

Romney sux!

[Nivek]

Obama bloez.

[Nivek]

Jill Stein -- way cool!

[LyricalRico]

Romney sux!

Obama bloez.

Finally, political conversation that even I can follow!

[penbeast0]

Playing devil's advocate re flat tax and VAT ideas:
What happens to charitable organizations - when the tax incentive to give to charities goes away?
What happens to the housing industry when the mortgage interest deduction goes away and interest rates go up?
What happens to people's savings when there is no tax incentive to contribute to 401k's and IRA's?
What happens to the banking industry because of the previous 2 issues?
If you switch to a flat tax, exceptions are inevitable, and eventually you end up with a tax code just as cumbersome as what you have today.
Does the VAT include a tax on food and/or medicines? If yes, it's probably going to end up being a regressive tax. If not, what rate would it have to be to raise adequate funds for the nation? Is the rate going to be so high that low and mid class people buy less - meaning the economy contracts and there are fewer jobs?

First, the charitable deduction is one of those that is most frequently gamed. Before we had it, people like Andrew Carnegie contributed a great deal to charities and most people still contributed to church. Yes, the United Way and groups that take your car and give you blue book value deductions on it (even though it is worth about half that) would suffer -- but the true valid charities would still run fine. We just wouldn't be subsidizing some people's charitable choices with the money of everyone else that doesn't believe in them.

Second, the housing deduction is probably the most regressive major deduction in the tax code for salaried workers. Richer people tend to own houses while poorer people tend to rent (not always but often). So, what you are doing is having poor people subsidize rich people's houses. That is fair?

We have incredibly low savings rates in this country relative to historic and world standards. Without those factors, there might be a marginal decrease in savings but it's unlikely to make major changes as people who save would move their savings into alternative investments such as stock or housing (making up some part of the lower investment in housing purchases when those purchases are no longer subsidized by tax credits).

If the banking industry requires government subsidies to survive, it needs to be fixed, not coddled.

Exceptions are not inevitable if you have a system where there is one tax rate plus a standard personal deduction. The starkness of the system makes adding "fingers on the scale" much more difficult. The place where these sort of changes become inevitable is when you instead compromise to a "sort of flat tax" system with "only a few changes to make it fairer." Then you have a few more changes to meet large political contributors definitions of fairer again and the mess returns -- but even some simplification is better than none.

The big argument against flat tax/VAT tax type simplification schemes is not the long term effect to me; it's that there will inevitably be some short term pain as people adjust to the new system. The bigger the changes (and I believe in large simple changes for the reasons I set out in the last paragraph) the more transactional cost there will be and that's a very real issue. I think the federal government should be half the size it is, but I don't deny that there would be a large immediate hit in unemployment if you did that (partially made up for by a large immediate incresae in entrepreneurial activity as people scramble to use their talents to make money in new ways).

Oh, and Nate, thanks for the feedback -- we could probably work out a decent platform without much difficulty as your ideas seem to come from many of the same assumptions about government and economic activity that mine do.

[verbal8]

If the banking industry requires government subsidies to survive, it needs to be fixed, not coddled.

Agreed.

Exceptions are not inevitable if you have a system where there is one tax rate plus a standard personal deduction. The starkness of the system makes adding "fingers on the scale" much more difficult. The place where these sort of changes become inevitable is when you instead compromise to a "sort of flat tax" system with "only a few changes to make it fairer." Then you have a few more changes to meet large political contributors definitions of fairer again and the mess returns -- but even some simplification is better than none.

I think a progressive, but simple tax system could be created if you had a large standard deduction and 2 rates of taxes. You probably could make a revenue neutral tax system with roughly a 30K deduction, a 15% rate and a 25% top rate if you get rid of deductions. You also have a tax all income at the same rate to make the system fair.

[fishercob]

Jill Stein -- way cool!

I am considering voting for her, actually.

[pancakes3]

Sobhani?

[verbal8]

One thing about the electoral college is our president is basically decided by the population of 8 states. You could argue that Florida and Ohio pretty much decide the president.

[miller31time]

Sobhani?

His commercials have been everywhere. He must be ungodly rich.

[Induveca]

That's crazy, I saw the name Sobhani and hoped it was Rob Sobhani. He's a great guy....met him once a philanthropy function in DC.

He is an oil guy, but in a very different manner. He basically has negotiated rights to oil fields for EU/US companies for the past 25-30 years. He's Iranian American (but claims to be christian.....ha), and can speak arabic etc. The deals were in the billions of dollars, so even with a 1% commission/royalties he must be worth at least a few hundred million.

[Induveca]

Romney now winning in all 4 major polls.....pretty crazy. Obviously I am biased, but it's a fact as of today at least.

R 50% O 46%... Rasmussen
R 50% O 47%... Gallup
R 49% O 48%... ABC/WaPo
R 47% O 46%... Reuters

[dobrojim]

Silver still has O at 70% of winning (~290 electoral votes)

thinking back to previous elections

GOP objections to:

Clinton - draft dodger - Romney - check
Gore - elite out of touch rich boy you wouldn't want to drink a beer with - Romney -check
Kerry - flip flopper - Romney - check
Obama - too inexperienced 1 term senator - Romney check (one term gov)

gotta admire their consistency

[nate33]

Silver still has O at 70% of winning (~290 electoral votes)

thinking back to previous elections

GOP objections to:

Clinton - draft dodger - Romney - check
Gore - elite out of touch rich boy you wouldn't want to drink a beer with - Romney -check
Kerry - flip flopper - Romney - check
Obama - too inexperienced 1 term senator - Romney check (one term gov)

gotta admire their consistency

Meh.

He's a draft dodger? True.

The rich boy issue isn't a huge strike. Bush Jr. was a rich boy too. And Mitt just doesn't come across as stuffy or out of touch like both Gore and Kerry.

Flip flopper? Yeah.

Too inexperienced? Nah. He was a one term governor, but he also has extensive private sector experience in leadership positions. If anything, Romney's experience is much better than any president of the last several terms because he has both public and private sector experience in something other than being a lawyer.