Oregonians Will Get Hit Hard

[The Cactus Leaguer]

re: Obama's tax plan:

Everyone keeps focusing on the tax rates above $250k. I don't think they are a good idea, but we did OK with them under Clinton, and I think the country will be fine as long we don't return to the 70% rates we had before Reagan.

What concerns me far more is the tax rebate system at the lower income levels. Not only is this a form of welfare, but it has the effect of creating a very high marginal rate within the $20k to $40k income range, nearly as high of a rate as the $250k range. It is bad enough to disincentivize wealthier people from working harder to earn more money, but it is crazy to do it in the low to middle income tax range.

But the reality is that neither tax plan will fly anything near what is being proposed. Clinton's didn't... W's didn't... Obama's won't, especially with the budget situation the way it is.

[Huckleberry3911948]

oregon or not the hard right who call themselves the true americans have got a problem. they like to spend but they don't like to pay.

[esya]

If you make the "game theory" argument that the marginal tax rate affects whether or not people take a job or a better paying job, where's the data? It might affect investors (ie, capital gains earners who do not have salaries and, for that money might not even need additional income or assets) but if every married female followed this theory the majority of them would not work.

I have been paying a "marginal tax rate" higher than my real tax rate ever since the day I got married. Does it burn my ____? You bet it does. But I still work for promotions and I still think I should earn more than 70% of men in similar jobs. Most married women are in the "higher marginal tax rate" position. So the argument that "marginal tax rate" affects anyone except wealthy investors does not fly.

At this point in time, the rich already have the assets and it is unlikely that the govt has enough power to get them back (at least in my lifetime). The baby went out with the bathwater starting in the 80s and now the working class, regardless of income, gets to suck it up for a good 30 years.

[The Cactus Leaguer]

There is a ton of data out there on game theory (including plenty of stuff written by Nobel Prize winning economists), but the problems with looking at any set of data are:

1. It is difficult to isolate.
2. Correlation does not necessarily equal causality.

For example, look at cigarette taxes. Higher cigarette taxes probably do cause smoking rates to decline, but there are plenty of other moving parts - health issues, addiction, black market, etc. - other factors which influence supply and demand.

Whether you believe in the "game theory" critique of Obamanomics or not, I think that there will be a lot of dissatisfaction for people in the $25k-$45k income range to have a marginal tax rate of around 40% in Obama's tax plan.

Regarding this comment:

At this point in time, the rich already have the assets and it is unlikely that the govt has enough power to get them back (at least in my lifetime).

To me, this reflects a 20th century socialism mindset, the goal of which was for government to control the means of production. There is a new 21st century socialism that is emerging to take its place, whereby the goal is to have the government control the means of consumption. So you are correct in your assertion, but in my view this is because the focus has shifted towards wanting to control consumption.