Follow the money part 1

The western front of the United States Capitol...

The western front of the United States Capitol. The Capitol serves as the seat of government for the United States Congress, the legislative branch of the U.S. federal government. It is located in Washington, D.C., on top of Capitol Hill at the east end of the National Mall. The building is marked by its central dome above a rotunda and two wings. It is an exemplar of the Neoclassical architecture style. (Photo credit: Wikipedia)

In order to understand the conversation in Washington, DC, it is necessary to follow the money. Taxes, who pays and how much will be the subject of the conversation at least until the election and probably afterward. Unless you understand a few facts, you will not be able to separate fact from fiction, and the GOP will be airing a lot of fiction.

One large talking point for the GOP is that half of Americans don’t pay Federal income taxes. That may be true, but it is not true for the reasons implied by the GOP that we are a nation of freeloaders who live off the government dole and should work harder. Everyone who works pays Social Security and Medicare taxes which hit the poor more than anyone else. These are called regressive taxes and are the opposite of progressive income taxes which in my opinion are the fairest taxes of them all.

At some point in the past, a bargain was struck in Congress not to raise the minimum wage which the poor depend on. That allowed business to pay everyone lower wages, from the poor on up the wage scale. To offset the shrinking value of the minimum wage, the Federal government started crediting low wage earners with an earned income tax credit which reduced or eliminated their Federal income tax due. The earned income tax credit is only given to those who are working. The unemployed are not eligible. Now the GOP wants to continue with an inadequate minimum wage and take away the earned income tax credit. That is a double whammy to the working poor.

To my mind, the solution would be to pay a living wage so that the poor earn enough to live a decent life and earn enough to pay income taxes as the conservatives say they favor. Then we can phase out the earned income tax credit.

Please see Follow the money part 2

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Aftershock

Robert Bernard Reich, American politician, aca...

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Aftershock, the Next Economy & America’s Future by Robert B. Reich is well worth reading. Here is the summary last paragraph.

“None of us can thrive in a nation divided between a small number of people receiving an ever larger share of the nation’s income and wealth, and everyone else receiving a declining share. The lopsidedness not only diminishes economic growth but also tears at the fabric of our society. America cannot succeed if the basic bargain at the heart of our economy remains broken. The most fortunate among us who have reached the pinnacle of power and success depend on a stable economic and political system. That stability rests on the public’s trust that the system operates in the interest of us all. Any loss of such trust threatens the well-being of everyone. We will choose reform, I believe, because we are a sensible nation, and reform is the only sensible option we have.”

Skin in the game

Round 4 wheel configuration on the U.S. versio...

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Some of the pundits on the Right now claim that the poor don’t pay their share of income taxes and thus don’t have any skin in the game, as they call exposure to our tax system. What they conveniently overlook is that the poor must pay payroll taxes, no matter their income level, and payroll taxes are severely regressive. If the pundits on the Right are serious about the poor paying income tax, they should support an immediate doubling of the minimum wage. Let the poor earn sufficient income to maintain a decent standard of living and they will be able to afford paying an income tax and will then have some skin in the game. That is why I support a living wage.