Politics, Government & Public Policy: November 2009 Archives
I guess this is a case of "if you understand, it probably doesn't apply to you": real marginal tax rates make work unrewarding for poor.
To say that antipoverty programs in the United States are perverted may be an understatement. When you take into account the loss of means-tested benefits (e.g., cash assistance, food stamps, housing subsidies, and health insurance), and the taxes that people pay on earned income, the return to working is essentially zero for those in the lower two quintiles of the income distribution.For many of the working poor, the implicit marginal tax rate is greater than 100 percent. The long-run consequence of undermining the positive incentive to work is, of course, the creation of an underclass acclimated to not working; the supplement of cash and noncash benefits with income from crime and the underground economy; and the government resorting to negative incentives such as mandatory work programs.
Below, I show the relationship between earned income and after-tax income plus subsidies for a hypothetical Virginia family of three, consisting of one adult and two minor children. As you can see, the relationship is essentially flat from $0 to about $40,000 in earned income.
The point is that there isn't much reason for a poor family to work when every extra dollar they earn reduces the government benefits they receive by a dollar or more. It's hard to see how such a system benefits anyone, even the poor.
Last week I asked how Nidal Malik Hasan could shoot almost 45 people while surrounded by soldiers. My mistake was in assuming that soldiers on an Army base would be armed. Apparently military bases are gun-free zones, making them "target-rich environments".
Neither Smith nor the other victims of Hasan’s assault had guns because soldiers on military bases within the United States generally are not allowed to carry them. Last week’s shootings, which killed 13 people and wounded more than 30, demonstrated once again the folly of “gun-free zones,” which attract and assist people bent on mass murder instead of deterring them. ...The first people with guns to confront Hasan, two local police officers, were the ones who put a stop to his rampage. And while Sgt. Kim Munley and Sgt. Mark Todd acted heroically, they did not arrive on the scene until a crucial 10 minutes or so had elapsed and Hasan had fired more than 100 rounds.
If someone else at the processing center had a gun when Hasan started shooting, it seems likely that fewer people would have been killed or injured. Furthermore, the knowledge that some of his victims would be armed might have led him to choose a different, softer target in order to maximize the impact of his attack.
Gun-free zones are naturally magnets for would-be mass murderers. I try hard to avoid them. The advocates of disarmament have a lot of blood on their hands.
Nancy Pelosi outmaneuvered Republicans by using faux abortion restrictions to get conservative Democrats on board with Obamacare.
In a victory for President Barack Obama, the Democratic-controlled House narrowly passed landmark health care legislation Saturday night to expand coverage to tens of millions who lack it and place tough new restrictions on the insurance industry. Republican opposition was nearly unanimous.The 220-215 vote cleared the way for the Senate to begin debate on the issue that has come to overshadow all others in Congress. ...
In the run-up to a final vote, conservatives from the two political parties joined forces to impose tough new restrictions on abortion coverage in insurance policies to be sold to many individuals and small groups. They prevailed on a roll call of 240-194.
Ironically, that only solidified support for the legislation, clearing the way for conservative Democrats to vote for it.
If Republicans hoped that the abortion restrictions would push pro-abortion leftists into the "no" camp they badly miscalculated. Far more likely is that the restrictions will simply be removed by the conference committee if the Senate every passes a bill.
Nice job Republicans, you got played by one of the worst Speakers in history.
William Voegeli writes a brilliant contrast between high-tax/high-benefit states and low-tax/low-benefit states. The archetypes are California and Texas.
In 1956, the economist Charles Tiebout provided the framework that best explains why people vote with their feet. The “consumer-voter,” as Tiebout called him, challenges government officials to “ascertain his wants for public goods and tax him accordingly.” Each jurisdiction offers its own package of public goods, along with a particular tax burden needed to pay for those goods. As a result, “the consumer-voter moves to that community whose local government best satisfies his set of preferences.” In selecting a jurisdiction, the mobile consumer-voter is, in effect, choosing a club to join based on the benefits that it offers and the dues that it charges.America’s federal system allows, at the state level, for 50 different clubs to join. At first glance, the states seem to differ between those that bundle numerous high-quality public benefits with high taxes and those that offer packages of low benefits and low taxes. These alternatives, of course, define the basic argument between liberals and conservatives over the ideal size and scope of government. Except for Oregon, John McCain carried every one of the 17 states with the lowest tax levels in the 2008 presidential election, while Barack Obama won every one of the 17 at the top of the list except for Wyoming and Alaska.
It’s not surprising, then, that an intense debate rages over which model is more satisfactory and sustainable. What is surprising is the growing evidence that the low-benefit, low-tax alternative succeeds not only on its own terms but also according to the criteria used by defenders of high benefits and high taxes. Whatever theoretical claims are made for imposing high taxes to provide generous government benefits, the practical reality is that these public goods are, increasingly, neither public nor good: their beneficiaries are mostly the service providers themselves, and their quality is poor. For evidence, look to the two largest states in the nation, which are fine representatives of the liberal and conservative alternatives.
Lots of data follows, but I think the key point is that low taxes are easier to deliver than high benefits.
If California doesn’t want to be Texas, it must find a way to be a better California. The easy thing about being Texas is that the government has a great deal of control over the part of its package deal that attracts consumer-voters—it must merely keep taxes low. California, on the other hand, must deliver on the high benefits promised in its sales pitch. It won’t be enough for its state and local governments to spend a lot of money; they have to spend it efficiently and effectively.
But spending money efficiently and effectively is probably what governments are worst at, which is why the high-tax/high-benefit model never seems to work out very well. The cry is always for greater accountability and reduced waste, but the end result is always more of the same: tax dollars are redistributed to favored groups to the detriment of the public as a whole. Low taxes are so much easier to deliver.
