Re: Re: Hitching a Ride on the Stimulus Train
by Anonymous
Let me elaborate on this suggestion a bit. Every so often, some analyst with an anti-government agenda comes out with the latest estimate of the per capita national debt at either the personal or household level. This usually comes with great hand wringing about how we are burdening our children (which is true, although as I will demonstrate below, it depends upon how you define our children). The per-capita debt figure would be apt if there were no Sixteenth Amendment. Prior to the constitutionalization of the income tax, taxes were calculated (though never collected) based on population size. Aside from tarrifs and excises, the only constitutional tax was a Head Tax. This is no longer the case. The reason the United States is able to borrow at current levels, and to do so cheaply, is because of the ability of the income tax to bring in money. While individuals can create and claim tax shelters, they need to be pretty good to evade the tax man for long, as many celebrities and candidates for cabinet posts have found (from Bud Abbott to Tom Daschle). Therefore, the correct way to estimate personal responsibility for the national debt is to divide the Debt held by the public (if not the entire debt, since it must eventually be repaid by general revenue) by income taxes collected (either personal only or personal plus corporate - although because corporate taxes are basically dividends and wages not distributed, to simplify you can use personal only). I am sure the number has changed recently. The last time I calculated it, the factor was 9. In other words, if you paid $10,000 in tax, your liability for the national debt is $90,000. If you paid $100,000 in tax, your share of the public debt is a cool million under current tax law. What does this have to do with the bailout out? If we bail out rich people by raising the debt, in the long run we do them no good - since it will only increase their taxes or the taxes their children will have to pay. While there is some mobility into the ranks of the super-rich, there is less mobility out of them. Their spending is also more "tax tolerant" - meaning that the rich will not miss a meal because their taxes go up. If you raise payroll taxes without an income tax offset, people will cut back on their spending and slow the economy. I hope this provides some perspective on this discussion.
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