There is no excuse for the EIC. It is welfare, plain and simple, but disguised so that almost no one (least of all, the recipients) see it as such.

People like Gulbranson piss me off. If you're going to insist that people live within their means, then don't sign your kids up for free meals and use the extra money on sports leagues. Clearly, sports leagues are not within your means. Pay for your kids' meals and let them play in the park.

I get irritated with fiscal conservatives who complain endlessly about all those poor people living off their tax money, yet never see the tax breaks they get for owning homes and having children as government aid. And then there are those "Keep your government hands off my Medicare" types.

"What happens when there are no more rich left to bleed -- and does anyone think there are enough rich left to bleed when everybody's on the dole? "

Draw a pyramid on a piece of paper. Now turn it upside down.

Answer: Collapse.

It is against all principles basic economics (or physics) that this "system" can sustain itself long term. And there belies the difference between the moochers and the producers. The unwillingness to accept reality...you can't get something for nothing.

When the people find they can vote themselves money, that will herald the end of the republic." - Benjamin Franklin

@MonicaP:

> yet never see the tax breaks they get for owning homes and having children as government aid.

I'm not in favor of the mortgage deduction as it's distortionary.

...but let's be clear: paying less taxes than party X proposes is NOT the same thing as "government aid", any more than negotiating with a mugger to take your cash but leave your watch is "mugger aid".

Neither the government nor the mugger are GIVING you anything; they're each just failing to take as much as they MIGHT HAVE.

The rich aren't being bled. Romney paid 14% on millions of income.

The middle class, upper and lower, are being bled.

The goal of the powerful class, both 'Republican' and 'Democrat' (ancient designations that no longer have any meaning) is to destroy the middle class and move all power and wealth to the top 1%, a la Mexico, India, and Brazil.

Class warfare exists, except that it's the middle class pitted against the lower class, a war engineered by the upper class.

For entertainment we have the distraction of manufactured elections. PACs, created by corporations for the benefit of the ruling class, will determine the election. The Supreme Court, appointed by the ruling class, will determine the election.

Your vote will not determine the election.

...but let's be clear: paying less taxes than party X proposes is NOT the same thing as "government aid", any more than negotiating with a mugger to take your cash but leave your watch is "mugger aid".

They're certainly getting this tax break at my expense. I don't have a child or a house, so I'm subsidizing those lifestyle choices.

One of the most telling parts of this article:

"Support for Republican candidates, who generally promise to cut government spending, has increased since 1980 in states where the federal government spends more than it collects. The greater the dependence, the greater the support for Republican candidates."

Many tea party constituents’ are only in favor of cutting government spending when it benefits someone else. Most of them are blatant hypocrites.

Also the rich aren't getting "bled". The current republican front runner had an income tax level of 13.9% on an income of millions of dollars. Which reminds me of one of my favorite quotes by Ronald Regan: "We're going to reform the tax code because some of these deductions, although well intentioned, have become loopholes. In some cases a millionaire can pay less in taxes than a bus driver, and that's just crazy"

Most people including the presumptive republican nominee consider reducing poverty, and "plugging holes in the safety net" a valid government function. Many people also consider reducing income inequality via government transfer payments a legitimate government role. If you disagree with those assessments feel free to make that argument.

But you shouldn't claim that the rich are being put upon. The numbers just don't back that up. The share of income going to those at the top of the income distribution has tripled in the past decade, at the same time the percent of their income that they pay in taxes is at historically low levels.

Neither does that claim that a well funded social safety net automatically leads to economic collapse hold water. Scandinavian countries have very large social safety nets, are doing just fine, and have been for quite some time.

"The problem with socialism is that eventually you run out of other people’s money"

-- Margaret Thatcher

The rich aren't being bled. Romney paid 14% on millions of income.

Almost all of Romeny's income was earned through investments. That means the initial capital for the investment had already been taxed as wage income. So, Romney's effective tax rate on that investment income was higher than 14%.

==============================

In an unrelated note, Romney is generous with his charitable donations $3.5 million in 2011 (roughly 17% of his income). Compare that with the 1% the Obamas gave of theirs.

"Scandinavian countries have very large social safety nets, are doing just fine, and have been for quite some time."

1) small homogenous countries dpnt compare well to us and 2) you don't find millions of people a year crossing the border into Finland to lay on that safety net, do you?

Thanks Conan, one more point in favor of taxing on overall wealth instead of yearly income.

"you don't find millions of people a year crossing the border into Finland to lay on that safety net, do you?"

None from the welfare states like Canada, Sweden, or Norway, no.

Mexico, capitalist bastion cheap labor - yup. Millions of 'em.

People sure hate it when you point these things out to them..one big problem is that people actually pay in on SS and Medicare, onstensibly to fund them, so they feel entitled. But their payments fall far short and are really just taxes.

It's just accounting fiction. So if you lump those programs in, the elderly get pissed off.

Then you have to consider SSDI and SSI, which the recipients don't exactly fund, then Medicaid and all the tax breaks.

I've yet to hear or read a clear discussion about those entitlements.

Thanks Conan, one more point in favor of taxing on overall wealth instead of yearly income.

'cause the one in France is working out so well?

The one that caused an estimated loss of €2.8 billion in 2006.

http://en.wikipedia.org/wiki/Solidarity_tax_on_wealth

If you tax wealth, wealthy people move elsewhere. And they take with them their conspicuous consumption (sales taxes), arts sponsorships, charitable endowments, and venture capital.

Good move that.

"If you tax wealth, wealthy people move elsewhere."

What? They won't just hold still and take it?

And isn't taxing somebody's overall wealth a little like eating the seed corn?

The rich aren't being bled. Romney paid 14% on millions of income
Millions paid in taxes is still not enough for you??? The problem isn't the income, it's the spending.

"The rich aren't being bled. Romney paid 14% on millions of income."

Hey, I got news for you, Stanky: 14% of millions is, well, millions. That's where the top-heavy numbers come from, where "the rich" pay most of the country's taxes right now.

Irony: you want to make it harder to be rich.

Just who is that penalizing, now?

(answer: the poor)

Yes, it's the poor people, the unemployed, the American victims of the jobs sent overseas for cheap labor, the Americans booted out of tech jobs for a flood of H1B visa workers - they're the ones who are victimizing the multi-zillionaires with their toothless PACs.

Poor bastards. Millions spent buying politicians and they still suffer so.

Say, where do these escaping millionaires move TO, anyway? Monaco? Creating a lot of jobs in Monaco, are they?

Something golden's trickling down from above, alrighty, but it isn't liquid gold.

I was eligible for the EIC one year, and I took it. I was working my way through school for a career change, and the money was welcome. As I recall, I spent it on wacky weird stuff like books and tuition. The following year I was fully employed, didn't get it then and haven't looked back.

I have a mortgage now, and I get a break on my taxes because of it. I spend some of *that* money on alcohol, good food, and high end acoustic guitars. The rest I squander on gasoline, clothing, Dr. bills, you know, all that boring shit.

A couple of points:

"In an unrelated note, Romney is generous with his charitable donations $3.5 million in 2011 (roughly 17% of his income). Compare that with the 1% the Obamas gave of theirs."

Most of that is to the mormon church. Given that institutions agenda I'd be happier if he didn't donate anything.

You don't find millions of people a year crossing the border into Finland to lay on that safety net, do you?

That's an immigration issue. Not a social services issue. Make knowingly employing an illegal immigrant a serious criminal offense, start locking up those who do it along with seizing their businesses, and watch the problem go away.

"If you tax wealth, wealthy people move elsewhere. And they take with them their conspicuous consumption (sales taxes), arts sponsorships, charitable endowments, and venture capital."

You obviously don't know what you're talking about. The United States has an extraterritorial taxation system. As long as you're a U.S. citizen you have to pay Federal Income taxes, no matter where in the world you reside. You can renounce your citizenship, but; it would be pretty hard to run a U.S. business without being able easily get into the country.

In any case the nonpartisan Congressional Budget Office did a study to see if higher taxes caused high net worth individuals to leave a state. The result was overwhelmingly an increase in taxes didn't cause people to leave an area. After all why should it? There's a reason the Koch brothers live in highly taxed NYC despite being from Kansas which is a low tax area. They might be able to save a couple of dollars living in Kansas, but; quality of life is much more important to them.

"Almost all of Romeny's income was earned through investments. That means the initial capital for the investment had already been taxed as wage income. So, Romney's effective tax rate on that investment income was higher than 14%."

No it wasn't. Initially Romeny made his money in venture capital, his income came from dividends and capital gains which are taxed at a rate of 15%, which is a far lower tax rate then income made though wages.

"Millions paid in taxes is still not enough for you??? The problem isn't the income, it's the spending."

No its not. I agree with Ronald Regan. A millionaire shouldn't have a lower tax rate then a bus driver.

Well, I see the envious leftists are all over this post.

If you're going to insist that people live within their means, then don't sign your kids up for free meals …

Since when did it become impossible to brown bag?

I'm not in favor of the mortgage deduction as it's distortionary.

So why should rentiers be preferred over owner-occupiers?

The rich aren't being bled. Romney paid 14% on millions of income.

Interesting you should quote a rate rather than an amount. Oh well, if your are going that route, IIRC, the upper 5% of all income earners pay as much in federal taxes as the other 95% combined.

Thanks Conan, one more point in favor of taxing on overall wealth instead of yearly income.

So what you mean to say is that you are in favor of penalizing savers. After all, even those of modest means exercising reasonable discipline can accumulate a fair amount of wealth.

Obviously, they are bastards with their boots on the necks of the poor.

No it wasn't. Initially Romney made his money in venture capital, his income came from dividends and capital gains which are taxed at a rate of 15%, which is a far lower tax rate then income made though wages.

Keeping in mind that dividends and capital gains are what's left over after the corporation pays its taxes. Which means (keeping in mind I am not an accountant) that the total tax rate is on the order of 50%.

I'm old enough to remember when investment income was taxed at the same rate as "earned" income.

Unfortunately, that rate, combined with double taxation, combined to greatly discourage investment.

Somewhere above someone, Old RPM Daddy, perhaps, said something to the effect of "… eating your own seed corn."

There are several concepts the Left has real trouble with: supply and demand, free, and opportunity cost. All of them are on display here.

Thanks Conan, one more point in favor of taxing on overall wealth instead of yearly income. -- Gog_Magog_Carpet_Reclaimers at February 13, 2012 12:29 PM

So you want a tax on assets is what you're saying? So I go through and build a successful business worth millions and sell it. In that time I paid cash for a house, a couple of nice cars, etc. I sold off the business for $3 million and invested it in the stock market in the mid '90's. My income is now about $3000 a month, but I own $750K in assets. Would it be fair to tax me on $750K? Why?

This is the same issue with inheritance taxes. I bought 500 acres of land at 21 to set up a farm. Back then it was only worth $50 an acre but I could get a nice haircut for 50¢. Now I want to give it to my grandchildren to farm. The land is now worth $1,200 per acre. But a decent haircut now costs $12. The grand-kids are now being taxed on $6,000,000 plus other assets at 45%. What right does the government have to all that money after I paid for the property way back when, paid income taxes on the farm profits in the intervening years, and then want my grand-children to follow in my footsteps?

They're certainly getting this tax break at my expense. I don't have a child or a house, so I'm subsidizing those lifestyle choices. -- MonicaP at February 13, 2012 9:37 AM

Are you for a flat tax? No breaks for anything? Then don't whine about the Mortgage Interest Deduction or the Child Interest Credit (Diff from the EIC.)

The Mortgage Interest Deduction and Child Interest Credit (CIC) are social interest credits. The CIC credit is $3500. If you can raise a kid for $3500 more power to you. You also get the same amount filing jointly when married. The Mortgage Interest is variable, but that was designed to encourage home ownership. If you can find and buy a house and the mortgage is less than the interest and property taxes you are pulling off a miracle. To further extend this thought: This is the same as 7.5% deduction for medical expenses, the 7.5% for business expenses, etc. I'll gladly lose those deductions if you agree to a flat tax of 16% on everybody. No counting for kids, housing, health care or the rest.

The government does not have an income problem -- it has a spending problem.

"Well, I see the envious leftists are all over this post."

Yes Ronald Regan was such an infamous leftist! Wait a minute...

"Keeping in mind that dividends and capital gains are what's left over after the corporation pays its taxes. Which means (keeping in mind I am not an accountant) that the total tax rate is on the order of 50%."

Well I am an accountant, I also have a degree in Finance and Applied Economics. The CBO estimates the average effective corporate tax rate (the rate corporations actually pay) for 2011 at 12.1%. That means even *if* you claim that the corporate tax rate falls on the owners of capital; the tax rate for millionaire hedge fund managers is still only 27.1%.

Speaking of the corporate tax rate it's funny how when someone proposes raising it country club conservatives fall all over themselves claiming that the tax will be passed on to consumers and workers. Now that it's being suggested that investment income be taxed at the same rate as regular income, the very same people are claiming that they're already overtaxed because corporate taxation falls on the owners of capital. I guess they'll go with whatever story is convenient for them.

"You obviously don't know what you're talking about. As long as you're a U.S. citizen you have to pay Federal Income taxes, no matter where in the world you reside. You can renounce your citizenship, but; it would be pretty hard to run a U.S. business without being able easily get into the country." -- Mike Hunter

I said nothing about renouncing citizenship.

I said the wealthy will move and take their conspicuous consumption, charitable donations, sponsorships, and endowments - you know the stuff the rich do to show off their wealth.

You can buy expensive stuff anywhere (good bye sales tax revenues) and you tend to donate to the symphony you attend - even if it's the London Symphony instead of the Chicago Symphony.

And hiding assets overseas is pretty easy. Just ask Chuck Schumer.

And, in the face of a US wealth tax, being a citizen of a modern Western country that doesn't tax wealth may be preferable for a number of the globe-trotting wealthy. Just ask Johnny Depp or Gwenneth Paltrow how quickly it would take them to become a citizen of their adopted countries to preserve their wealth in the face of onerously confiscatory taxes.

Just ask every wealthy person in the US with a house in the Caymans or a chalet in Switzerland how quickly they could move and how comfortably they would live. A big chunk of their wealth is already overseas so even the exit tax wouldn't be a slow them down.

And you could easily run a company with a US subsidiary from overseas.

Posted by: Mike Hunter at February 13, 2012 7:53 PM

Well considering that the number of $12.35 per hour millionaires that exist is probably less than 1000 (lottery, cyber execs, and smart savers) all the rest were in Wall Street, Chicago MercEx, etc. and none had no risk of of losing their investment.

Many of them were CEO's at some point. So for them to be taxed at 35% for the income from investing the money that was previously taxed at 35% is not acceptable to me. If I paid taxes on the money why should I be taxed again? What if I buy 13,000 ounces of silver at $25 per ounce ($325,000). If it is worth $600,000 five years later, should I pay taxes on the the $275,000 profit? Then if it is worth $150,000 then I should get $275000 back from the government five years later when I sell it, right?

... it's funny how when someone proposes raising it country club conservatives fall all over themselves ... I guess they'll go with whatever story is convenient for them.

You had me all the up to "I guess".

Speaking of having it both ways, Progressives relentlessly say both corporations and investment income aren't taxed enough.

Since I happen to believe that all costs are passed to the consumer, I should have thought about that before saying the effective rate was 50% (or even 27%).

So I'll happily concede that the real rate on investment income is 15%, and ignore whether downside risk is borne primarily by investors.

That means that corporate taxation is a stupendous lie imposed upon us by Congress, solely as a way to hide from us the cost of government.

As for the effective tax rate on investment, whatever it is this much is true: if you want less of it, tax it more.

Which leads to a corollary (which also highlights Progressives' profound inability to comprehend opportunity cost): taxing investment income at a higher rate must mean that the government will have more to spend on immediate government consumption, at the cost of other things, whether private spending now, or investment for the future.

Rather, Progressives talk about that money as if it is just laying around in giant piles, free for the taking.

[Memo to self: Preview is a GREAT way to find open HTML tags.]

The [CBO study] result was overwhelmingly an increase in taxes didn't cause people to leave an area.

On top of the general inaccuracies and perils inherent in any macroeconomic forecast, the CBO has many issues with its estimates.

For one, it uses Keynsian models. These models assume minimal decrease in the tax base with higher taxation (i.e., no tax avoidance behavior).

For another, it is often forced to use the costs provided by the advocates of the bill being analyzed. According to a Reuters opinion piece in 2010 on Obamacare, "CBO’s deficit-reduction estimates are further divorced from reality because they don’t include as much as $371 billion in new spending to fix reimbursement rates for doctors who treat Medicare patients. Imagine that — health reform legislation that doesn’t include payments to doctors. Only in Washington, DC."

Meanwhile, in the real world...

The French found their wealth tax cost them tax revenues as wealthy people moved to avoid it.

The state of Maryland had 3,000 tax returns with incomes over $1 million in 2008. In 2009, the year the millionaire tax kicked in, that number fell to 2,000 returns. While economic conditions played a role in the decline, they don't explain all of it.

==============================

Most of that is to the [M]ormon church. Given that institution['s] agenda I'd be happier if he didn't donate anything.

According to the Washington Post, of the $7 million the Romneys gave to charitable causes, at least $4.1 million went to the LDS church.

While I tend to view donations to the church administration in a different light than ones to a direct charity (even a church-affiliated one), that still leaves roughly $2.9 million for actual charities.

==============================

Here's an interesting, and only somewhat hostile, New York TImes article explaining Romney's taxation arrangements and income:

http://www.nytimes.com/2011/12/19/us/politics/retirement-deal-keeps-bain-money-flowing-to-romney.html?_r=2&pagewanted=all

No its not. I agree with Ronald Regan. A millionaire shouldn't have a lower tax rate then a bus driver.

The problem is spending. There is more then enough revenue coming in. Reagan's point was getting rid of loop holes, that's a no brainer. This, in theory, would lower taxes and help the economy. Reagan's point was not to raise taxes.

So after Rom paid millions in taxes, people still want more?? What's enough? $100 million? A bus driver works at an hourly rate. Rom doesn't. It's not the same.

"Yes, it's the poor people, the unemployed, the American victims of the jobs sent overseas for cheap labor, the Americans booted out of tech jobs for a flood of H1B visa workers - they're the ones who are victimizing the multi-zillionaires with their toothless PACs."

Completely missed the target. At its center: When you make it harder to be "rich", you make it harder on the poor also. And they do NOT have what it takes to work around that.

-----

"That means even *if* you claim that the corporate tax rate falls on the owners of capital; the tax rate for millionaire hedge fund managers is still only 27.1%."

Only?! WTF do you THINK it should be?

Before anyone brings up the Warren Buffet secretary lie, you need to understand that Buffet's taxed on the capital gains from his 50.1% stock holdings on Capital Gains from the profits from his Berkshire Hathaway preferred stock of $1.4 billion dividend. That is a 15%. Not income from a salary.

Add it all up and Berkshire Hathaway (BRK.A) should bring in at least $1.4 billion in cash dividends on annual basis from its equity holdings.

($1.4 billion * 2%) * 35% tax would be $9,800,000 at a 2% salary of the dividend.

The thing is that money was already taxed when it was a salary.

Hey, let's bring this back to earth.

If you were refunded tax money last year, you must declare it as income this year.

Think about that!