Why are the bankruptcy laws available to the rich but not to every-man? What do Democrats gain when they embrace Arlen Specter?
Some may wonder how they are interrelated, but they are.
We have witnessed many large and small corporations become overwhelmed with debt. They file for what is known as Chapter 11 bankruptcy under which their debtors are encouraged, and many are required to forgive at least part of the debts and the corporation emerges from the process with a new beginning. We saw that happen with Continental Airlines, and we now see the process unfolding with Chrysler and quite possibly soon with GM.
It used to be available to the average Joe or Jane (maybe even to Joe the Plumber) but it was taken away in March of 2005. The matter is summarized by the BSC Alliance.com Credit and Debt solutions alliance, as follows: "After an eight year long battle funded by the banking and credit card industries, who contributed more than $40 million to federal election campaigns during this period, The United States Bankruptcy Code has finally been amended. The new bill was approved by the Senate in March 2005 and by the House on April 14, 2005. The changes to the Bankruptcy Code became official law on October 17, 2005."
Today adequate publicity has been given to the predatory practices of the credit card industry. They drive people into bankruptcy by taking a relatively small debt, and by encouraging the debtor to pay the smallest conceivable amount each month, create a situation where the principal instead of shrinking gets bigger over time, and then by increasing the interest rate at will and adding exorbitant fees if a monthly payment is missed, they create a situation where the debtor often ends up in debt to a multiple of the debt incurred. G-d forbid the debtor should get sick resulting in his loss of job, health insurance and now mounting debts he finds the door to debt relief through the bankruptcy courts no longer available.
That 2005 bill passed the senate by a vote of 74 to 25. Not a single Republican voted against it. They are not always the party of NO. Not when it comes to protecting the interests of the banking industry. Where was Arlen Specter? He voted with his brethren. According to "On the Issues", he voted with the Republican Party 67% of 322 votes. Democrats are not so united. Fourteen, including now VP Biden and now majority leader Reid voted with the Republicans. But at least these Democrats didn't vote 67% of the time with Republicans. The pressure after eight years of lobbying was intense and Bill Clinton signed the bill.
Fast forward to 2009, we have a bankruptcy bill to protect homeowners from foreclosure when their homes are "under water" pending in the Senate.
Once again the party of NO was solidly against this. They don't believe in giving anyone, but the rich, a break. Where was Arlen Specter? You guessed it, he was now officially a Democrat, but who did he vote with? He voted with his former brethren. We know where his heart lies. To be sure, once again 12 Democrats voted against every-man but that is the more reason why we don't need another like Specter.
What happened to Arlen Specter? In today's Republican Party 67% isn't good enough. It's like the Communist party of old. They expect 100%. Specter was about to lose the Republican Party primary in Pennsylvania to a true blue acolyte of Right wing politics from the Club for Growth. This Republican nominee would have had no chance to win and a real Democrat would have been elected; one who could have been counted on to support the Obama agenda. But instead the Trojan horse in the form of Specter has entered the gates. The Democratic party is a big tent. There is no problem with having a Democrat who only votes 67% of the time with his party. But do the Democrats need someone who votes 33% of the time with them, and 67% with Republicans? What have Democrats gained? If this were a situation of needing one vote to organize the Senate, it might have been understandable. But that is not the case, and Specter cannot be counted on to be the 60th vote to prevent a filibuster. He has already announced on "Meet the Press" last Sunday that he will oppose the Presidents Health Reform initiative.
I say Republicans don't want him and Democrats shouldn't either. It is to be hoped that Specter will be challenged in the Democratic primary and will be sent into the retirement he so richly deserves.
In referring to a "true blue acolyte of Right wing politics" above I do not, as Mr. Chiu suggests in his Letter to the Editor of the Fort Lee Suburbanite, which is quoted below, mean to imply Fascist or Nazi. I simply cannot find any other suitable word for this movement. The media often calls them "conservative" but they are anything but conservative. They do not want to conserve, but to radically change things to the way the were in the days of President Harding, to undo the "New Deal" and the "Great Society" and even many reforms enacted under Republicans, Teddy Roosevelt and even Richard Nixon. That is not conservative. Some would have called them Reactionaries, but I don't know what that tells us. Right Wing is appropriate, and the bellyaching from people who have called progressives Communists, Fascists, Socialists, Muslim and friend of terrorists, in the case of Obama, and even lesbian, in the case of Clinton, (not that either Muslim or lesbian should be a term of opprobrium) have no standing to complain about a term that does no more than honestly describe their philosophy. As for the suggestion that the debate is just about which stimulus is better, that makes Republican opposition seem even worse, for that would hardly justify their unanimously trying to block a plan that they consider only not as good as theirs.
The letter from Mr. Chiu is quoted below:
"I have read many of Emil Scheller's letters. I wonder if his use of "Right Wing" isn't just for some descriptive purpose, but also code language for Nazi or Fascist. In liberal New York, this term is hardly a compliment.
"If he took a friendlier tone, I'm sure he could convert some people to his positions. In fact, many people, especially if they don't double check his "facts" because his arguments can be persuasive. But instead he labels people who don't agree with him as "minions of the Republican party" or uses other epithets synonymous with "idiot".
"In his letter published in the April 24, 2009 issue, he mentions his previous statement that Republicans claim the New Deal was "totally ineffective". I've never heard any Republican say that. My old high school history teacher, a Democrat, said the New Deal created jobs but did not itself end the Depression. It was WWII that did. That's the consensus of the history books. And, again, no one ever said "totally ineffective". Any stimulus would create economic activity. If Democrats spent $1 and get 50 cents of stimulus, the Republicans may want 60 or 70 cents of stimulus from that dollar. And they may claim that their plan is better. That's what the debate is about."
Showing posts with label Joe The Plumber. Show all posts
Showing posts with label Joe The Plumber. Show all posts
Tuesday, May 05, 2009
Monday, November 17, 2008
Joe the Plumber or The Graduated Income Tax
Joe the Plumber! What was that about anyway? They never told us in so many words. Joe complained that he might have to pay more taxes if he ended up making more than $250,000. Why would that be wrong? They quoted Obama as saying, “Spread the wealth.” What is wrong with that? McCain said, “I want to grow the wealth, not spread it.” Are the two contradictory? The campaign is over and one might ask why am I focusing on something that happened in the campaign? The answer is that these issues don’t disappear when a campaign ends. They are the stuff that guides policy.
A campaign is conducted with catch words that are believed to have emotional appeal. They usually have a subtext. The basic subtext in this case was that a graduated income tax is wrong. There was also a suggestion that a graduated tax, or at least making the tax slightly more graduated, was socialistic or European.
Why should we penalize people for success? Why should we “soak the rich?” But that misses the point. The purpose is not to penalize people for success or to “soak the rich” but rather to raise the huge amounts of money that the US Treasury needs to pay its bills, and the money can only be gotten from people who have it. A flat tax, as is advocated by many Republicans, led by Steve Forbes, would mean a tax that would be devastating on people with small, or even moderate incomes. For that reason our income tax has always been a graduated one. As for it being socialistic or European, a graduated income tax is as American as apple pie.
Our first income tax was passed in 1861 to pay for the costs of the Civil War. It was set at a flat 3% but it exempted all incomes under $800. - (Source - The US Treasury for this and all other statements which are not otherwise sourced) - Thus even then there was a recognition that only people making above a certain amount could fairly be taxed. The census data show that the average factory wage in 1860 was about $20/mo. or $240/year compared with a median farm profit of about $150/year in Wayne County. The appropriate inflation factor is 175, as is discussed in the article at an earlier point, the equivalent factory wage today would be $42,000/year. (The 1860 Census Of Manufacuring By Gerald K. Moore)
Thus even then there was a recognition that only people making substantially more than three times the average factory wage should bear this tax burden. The tax was on the rich. In 1862 this was refined. A two-tiered rate structure was enacted, with taxable incomes up to $10,000 (it is presumed that the $800 exemption was retained) taxed at a 3 percent rate and higher incomes taxed at 5 percent. A standard deduction of $600 was enacted and a variety of deductions were permitted for such things as rental housing, repairs, losses, and other taxes paid. In addition, to assure timely collection, taxes were "withheld at the source" by employers. It is remarkable that our first attempt at an income tax so closely resembled the graduated taxes of today and this was enacted long before any European or Socialist entity even conceived of the idea. At the end of the war the income tax was repealed because the need for the revenue was no longer needed, but its constitutionality was never challenged.
In 1894 increasing revenue was again needed, and a new income tax law was passed, but this time it was challenged in the courts, and the Supreme Court ruled it to be unconstitutional because Article I, Section 2 Clause 3 of the Constitution provided that taxes have to be apportioned, “among the several States … according to their respective Numbers… It took until 1913 before the 16th amendment to the Constitution was passed, which removed this obstacle. In October of 1923, Congress passed a new income tax law with rates beginning at 1 percent and rising to 7 percent for taxpayers with income in excess of $500,000. Less than 1 percent of the population paid an income tax at the time. As can be seen, throughout our history it was assumed that the tax burden must be born by those who could afford it, limiting the tax to the richest 1% and using a graduated tax to make sure that the richest paid the largest percent.
With World War I again requiring greater revenue Congress passed the 1916 Revenue Act raised the lowest tax rate from 1 percent to 2 percent and raised the top rate to 15 percent on taxpayers with incomes in excess of $1.5 million. The 1916 Act also imposed taxes on estates (now referred to by its opponents as the death tax) and excess business profits. In 1916, a taxpayer needed $1.5 million in taxable income to face a 15 percent rate. By 1917 a taxpayer with only $40,000 faced a 16 percent rate and the individual with $1.5 million faced a tax rate of 67 percent. Another revenue act was passed in 1918, which hiked tax rates once again, this time raising the bottom rate to 6 percent and the top rate to 77 percent. (It should be noted that those with incomes over 1.5 million had a marginal tax of 77%) Only 55% of the population paid any income tax. The burden was entirely born by those deemed able to afford it. During World War II taxpayers with incomes over $1 million faced a top rate of 94 percent.
Throughout the 1950s tax policy was increasingly seen as a tool stabilizing macroeconomic activity. The economy remained subject to frequent boom and bust cycles and many policymakers readily accepted the new economic policy of raising or lowering taxes and spending to adjust aggregate demand and thereby smooth the business cycle. This is what is generally known as Keynesian economics and during the Presidency of Richard Nixon he famously said, “We are all Keynesians now.” (The Cato Institute)
In any case as can be seen Republican claims that a graduated income tax is either new, or too high for the rich, or that taxes should be cut all the time and never raised, have no historical basis, and their claim that the are somehow un-American, European or Socialist have no basis in fact.
One of the reasons among many that we are now in the serious financial and economic crisis is that we increasingly abandoned Keynesian economics and adopted Supply Side policies. But without, at this point, arguing the merits or demerits of these respective policies, the claims that a graduated income tax is un-American or Socialistic clearly has no basis in American history and the idea that they have a foreign origin is laughable. During the Bush years with an economy not needing stimulus Bush kept tax rates low creating a huge deficit, ignoring the sound policies of the past, and overheating the economy.
As for the claim that Reagan established the principle that taxes should always be lowered and in the words of Vice-President, Cheney"…proved deficits don't matter," (The Washington Post - June 9, 2004) is another distortion of history. In fact Reagan proved just the opposite. Shortly after coming into office, in 1981 he cut taxes with a 25 percent reduction in individual tax brackets, phased in over 3 years, and indexed for inflation thereafter. This brought the top tax bracket down to 50 percent. The result was a huge and growing deficit. But rather than feeling that this didn’t matter, Reagan became concerned and by 1982 agreed to a sharp rollback of corporate tax cuts, and a smaller rollback of individual income tax cuts. Over all, the 1982 tax increase undid about a third of the 1981 cut as a share of G.D.P., and the increase was substantially larger than Bill Clinton's 1993 tax increase. (Paul Krugman - The NY Times – June 8, 2004)
It is appropriate to debate tax and economic policy. It is not appropriate to distort, to dissemble, or to use names like Socialist to obscure the true facts and the true history, but when a Party essentially represents the economic interests of 2% to 5% of their constituents, that is apparently the only way they can hope to win elections. What is amazing is that so many continue to vote for them.
A campaign is conducted with catch words that are believed to have emotional appeal. They usually have a subtext. The basic subtext in this case was that a graduated income tax is wrong. There was also a suggestion that a graduated tax, or at least making the tax slightly more graduated, was socialistic or European.
Why should we penalize people for success? Why should we “soak the rich?” But that misses the point. The purpose is not to penalize people for success or to “soak the rich” but rather to raise the huge amounts of money that the US Treasury needs to pay its bills, and the money can only be gotten from people who have it. A flat tax, as is advocated by many Republicans, led by Steve Forbes, would mean a tax that would be devastating on people with small, or even moderate incomes. For that reason our income tax has always been a graduated one. As for it being socialistic or European, a graduated income tax is as American as apple pie.
Our first income tax was passed in 1861 to pay for the costs of the Civil War. It was set at a flat 3% but it exempted all incomes under $800. - (Source - The US Treasury for this and all other statements which are not otherwise sourced) - Thus even then there was a recognition that only people making above a certain amount could fairly be taxed. The census data show that the average factory wage in 1860 was about $20/mo. or $240/year compared with a median farm profit of about $150/year in Wayne County. The appropriate inflation factor is 175, as is discussed in the article at an earlier point, the equivalent factory wage today would be $42,000/year. (The 1860 Census Of Manufacuring By Gerald K. Moore)
Thus even then there was a recognition that only people making substantially more than three times the average factory wage should bear this tax burden. The tax was on the rich. In 1862 this was refined. A two-tiered rate structure was enacted, with taxable incomes up to $10,000 (it is presumed that the $800 exemption was retained) taxed at a 3 percent rate and higher incomes taxed at 5 percent. A standard deduction of $600 was enacted and a variety of deductions were permitted for such things as rental housing, repairs, losses, and other taxes paid. In addition, to assure timely collection, taxes were "withheld at the source" by employers. It is remarkable that our first attempt at an income tax so closely resembled the graduated taxes of today and this was enacted long before any European or Socialist entity even conceived of the idea. At the end of the war the income tax was repealed because the need for the revenue was no longer needed, but its constitutionality was never challenged.
In 1894 increasing revenue was again needed, and a new income tax law was passed, but this time it was challenged in the courts, and the Supreme Court ruled it to be unconstitutional because Article I, Section 2 Clause 3 of the Constitution provided that taxes have to be apportioned, “among the several States … according to their respective Numbers… It took until 1913 before the 16th amendment to the Constitution was passed, which removed this obstacle. In October of 1923, Congress passed a new income tax law with rates beginning at 1 percent and rising to 7 percent for taxpayers with income in excess of $500,000. Less than 1 percent of the population paid an income tax at the time. As can be seen, throughout our history it was assumed that the tax burden must be born by those who could afford it, limiting the tax to the richest 1% and using a graduated tax to make sure that the richest paid the largest percent.
With World War I again requiring greater revenue Congress passed the 1916 Revenue Act raised the lowest tax rate from 1 percent to 2 percent and raised the top rate to 15 percent on taxpayers with incomes in excess of $1.5 million. The 1916 Act also imposed taxes on estates (now referred to by its opponents as the death tax) and excess business profits. In 1916, a taxpayer needed $1.5 million in taxable income to face a 15 percent rate. By 1917 a taxpayer with only $40,000 faced a 16 percent rate and the individual with $1.5 million faced a tax rate of 67 percent. Another revenue act was passed in 1918, which hiked tax rates once again, this time raising the bottom rate to 6 percent and the top rate to 77 percent. (It should be noted that those with incomes over 1.5 million had a marginal tax of 77%) Only 55% of the population paid any income tax. The burden was entirely born by those deemed able to afford it. During World War II taxpayers with incomes over $1 million faced a top rate of 94 percent.
Throughout the 1950s tax policy was increasingly seen as a tool stabilizing macroeconomic activity. The economy remained subject to frequent boom and bust cycles and many policymakers readily accepted the new economic policy of raising or lowering taxes and spending to adjust aggregate demand and thereby smooth the business cycle. This is what is generally known as Keynesian economics and during the Presidency of Richard Nixon he famously said, “We are all Keynesians now.” (The Cato Institute)
In any case as can be seen Republican claims that a graduated income tax is either new, or too high for the rich, or that taxes should be cut all the time and never raised, have no historical basis, and their claim that the are somehow un-American, European or Socialist have no basis in fact.
One of the reasons among many that we are now in the serious financial and economic crisis is that we increasingly abandoned Keynesian economics and adopted Supply Side policies. But without, at this point, arguing the merits or demerits of these respective policies, the claims that a graduated income tax is un-American or Socialistic clearly has no basis in American history and the idea that they have a foreign origin is laughable. During the Bush years with an economy not needing stimulus Bush kept tax rates low creating a huge deficit, ignoring the sound policies of the past, and overheating the economy.
As for the claim that Reagan established the principle that taxes should always be lowered and in the words of Vice-President, Cheney"…proved deficits don't matter," (The Washington Post - June 9, 2004) is another distortion of history. In fact Reagan proved just the opposite. Shortly after coming into office, in 1981 he cut taxes with a 25 percent reduction in individual tax brackets, phased in over 3 years, and indexed for inflation thereafter. This brought the top tax bracket down to 50 percent. The result was a huge and growing deficit. But rather than feeling that this didn’t matter, Reagan became concerned and by 1982 agreed to a sharp rollback of corporate tax cuts, and a smaller rollback of individual income tax cuts. Over all, the 1982 tax increase undid about a third of the 1981 cut as a share of G.D.P., and the increase was substantially larger than Bill Clinton's 1993 tax increase. (Paul Krugman - The NY Times – June 8, 2004)
It is appropriate to debate tax and economic policy. It is not appropriate to distort, to dissemble, or to use names like Socialist to obscure the true facts and the true history, but when a Party essentially represents the economic interests of 2% to 5% of their constituents, that is apparently the only way they can hope to win elections. What is amazing is that so many continue to vote for them.
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