Should a Presidential Candidate Just Use Exclamation Points with Small Words like "HUGE!!!" or Take on Complicated Issues to Improve the Life of the Poor?
I think it's the latter. That's why I am running for President.
Take a look at this article. Larry Kotlikoff and others pointed out in 2020, that the marginal rate of taxes for the poor to get out of poverty is, in many cases, extraordinarily high. I will change this. There is no need to read the whole complex article. But ask yourself one question. Do you think a presidential candidate should at least understand it?
From the abstract.
“Our findings are striking. One in four low-wage workers face marginal net tax rates above 70 percent, effectively locking them into poverty. Over half face remaining lifetime marginal net tax rates above 45 percent.”
A quarter of the poor face marginal net tax rates above 70%. So, someone is on say Social Security Disability, they want to work a little, then a little more, then a little more. But along the way, say they go from making nothing to as little as $14,000. Still in poverty, still poor. Along comes the Social Security Administration, after the fact, analyzing tax returns, with a letter wanting, say $7,000. The person does not have the money. They are still in poverty. What do they do?
From the introduction.
“A plethora of federal and state tax and benefit policies jointly determine Americans’ incentives to work. Adopted with apparently no regard to their collective impact on work incentives, many of these policies are extraordinarily complex, rendering lifetime budget constraints highly non-linear and remarkably non-convex. The source of the nonlinearities and non-convexities are complex and often arcane provisions that condition tax payments and benefit receipts on labor income, asset income, total income, and/or the level of assets. Social Security typifies our fiscal system’s complexity. It has 2,728 primary rules governing the receipt of its 12 benefits, plus tens of thousands of secondary rules circumscribing these main rules.1 As for fiscal-system non-convexities, they are nearly everywhere one looks. Earn $1 too much two years back and your Medicare Part-B premiums will rise by close to $800…”
Wow, do you see why I am for Herman Cain’s 9-9-9 Plan and Larry Kotlikoff’s Social Security Plan? I hope so. Do you think anyone else will even try? I don’t think so.
I could go on, but maybe just stare at pages 16 and 17. This is just plain dumb. The case studies that start on page 23 are amazingly sad. I will change this.
I will leave you with part of the conclusion.
“Third, marginal tax rates among the poor are very highly dispersed. Fourth, one in four bottom-quintile households, regardless of age, face marginal tax rates above 65 percent. Thus, a major share of poor households are effectively locked into poverty by America’s fiscal system.”
Think about that.
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