6 ms·

It should be mandatory for any incoming politician to take a couple introductory economics courses before serving. There are too many laws where incentives are

• sigzero 16y ago
  Citation on that 50% please. I have never heard that.
  • maneesh 16y ago
    Well I just googled this: http://www.msnbc.msn.com/id/36226444/ http://www.msnbc.msn.com/id/36226444/ Another way to escape federal tax liability (up to ~$90,000 income) is to live outside the US 11 months / year
    • barmstrong 16y ago
      You are probably paying tax in the country you moved to though.
      • gyardley 16y ago
        Well, if the other country has income taxes. For example, in the British Virgin Islands the income tax rate is zero. I don't get why more Americans aren't enraged about the United States' treatment of emigrants. For citizens of most other countries, if you don't live there and you don't make money there, you don't pay taxes there.
        • _delirium 16y ago
          Why would Americans be enraged about that? The U.S. has a long history of distrusting people who leave the country. Sticking it to emigrants (i.e. people who "abandoned the USA") would be popular among both the left and right, and among many social classes. Emigrants aren't very well liked among populists in either the Republican or Democratic parties, sometimes even seen as approaching a mild form of treason, whether they left for draft-dodging reasons (Candada during Vietnam), tax-dodging reasons (BVI & co.), or political reasons (communists who emigrated to Russia). People don't mean "love it or leave it" in the sense that both are legitimate choices! I say this as someone about to start a job in Europe myself; it's somewhat of a sore point with many people ("America not good enough for you?"). The current economy being bad is really the only thing that makes it relatively easy to smooth over, because I can fall back on, "well nobody in the U.S. was hiring in my area and this opportunity in Europe came up", and people sorta understand because everyone's willing to believe that the U.S. job market is bad right now. Mostly I can't think of the constituency that would support lowering taxes on emigrants. Republicans are usually the enthusiastic tax-cutters, but emigrants are even less popular among Republicans than among Democrats, partly due to heartland-patriotism type of culture, and partly because the expat vote is skewed Democratic.
  • jacoblyles 16y ago
    Actually, the bottom 50% of earners pay ~3% of federal income tax. http://www.heritage.org/budgetchartbook/top10-percent-income-earners http://www.heritage.org/budgetchartbook/top10-percent-income... People become eligible for more federal benefits as they earn less so it may net out to less than 0%, but I don't have a citation for that.
  • tseabrooks 16y ago
    This USA Today article says that 47% of people payed no Federal Taxes. I think the more interesting number is that 40% make a profit on the federal income tax. http://www.usatoday.com/news/opinion/editorials/2010-04-16-editorial16_ST_N.htm http://www.usatoday.com/news/opinion/editorials/2010-04-16-e...
  • matwood 16y ago
    Google is your friend. http://finance.yahoo.com/news/Nearly-half-of-US-households-apf-1105567323.html?x=0 http://finance.yahoo.com/news/Nearly-half-of-US-households-a... About 47 percent will pay no federal income taxes at all for 2009. Either their incomes were too low, or they qualified for enough credits, deductions and exemptions to eliminate their liability. That's according to projections by the Tax Policy Center, a Washington research organization. Also, the irs.gov site has tons of data with various breakdowns.
• colinprince 16y ago
  For those of us outside the us, would you be able to expand on the "federal income tax liability" issue? [edit] Thanks, that helps, but I still don't understand what you think is being correctly or incorrectly incentivized here.
  • protomyth 16y ago
    <not original poster> I'll give it a go. When a majority of a countries people are not paying for the country or (worse) profiting off the government, then they have no incentive to keep government spending under control. This leads to the increase of tax money coming from fewer and fewer citizens until the whole thing collapses. Paying for something means that you pay more attention and be more critical of failures.
    • Symmetry 16y ago
      It doesn't actually work that way, if you think about it. In an election your vote pretty much doesn't matter. That means that if you're just going to vote for your own self interest you might as well not bother getting out of bed in the morning. Instead people mostly vote in ways that let them tell themselves that they're good people. Empirically, this is pretty well backed. For instance there isn't much correlation between income and how people vote on taxes, or between age and how they vote on social security. Of course people have little incentive to find out which policies will bring actual good results as opposed to those which superficially seem nice. Luckily politicians who hope to be reelected can't do anything that turns out to be too stupid in practice... some fraction of the time. And so we sort of muddle our way through things.
      • protomyth 16y ago
        There is quite a class of people who vote for their own self interest (e.g. California Government Union employees). 2000 should be the biggest counter example to your vote doesn't count(1). 1) The history of the 2000 election actually makes a serious point about polling and the failure of a news organization (Fox) to realized polls hadn't actually closed in the panhandle of Florida (Central Time). That area of Florida is heavily Republican and lower voter turn out because of the pre-announced winner (Gore). A few more Democrats voting or a non-preannouncement could have prevented one of the stupidest episodes in US voting history. Vote like you've heard nothing.
• nodata 16y ago
  But which school of economics should the politicians follow for their introductory economics class?
  • jacoblyles 16y ago
    I'd settle for "any". If they can understand that increasing the cost of hiring workers leads to more unemployment, then that will be an improvement. Sometimes I think politicians can't even reason through the most basic of incentives.
    • wisty 16y ago
      I think they do understand this. The problem is, they don't care. Their incentive is to convince marginal voters to vote for them, not to make the economy work.
  • Symmetry 16y ago
    Don't worry about schools, just worry about what 90% of economists agree on and it'll be a huge improvement. http://gregmankiw.blogspot.com/2009/02/news-flash-economists-agree.html http://gregmankiw.blogspot.com/2009/02/news-flash-economists...
• kscaldef 16y ago
  Are there any official sources for that number? All I've ever been able to find are articles like this one: http://finance.yahoo.com/news/Nearly-half-of-US-households-apf-1105567323.html?x=0 http://finance.yahoo.com/news/Nearly-half-of-US-households-a... where everything is "according to projections by the Tax Policy Center" or similar groups. And, the explanations given in that article are less than compelling to me. For example, they focus heavily on the "family of four making as much as $50,000 [with] two children younger than 17". I'm a little skeptical that such families actually make up 50% of US households. (Just consider that you'll pay taxes for 50 or 60 years, but if you have 2 children, you can only be in this category for 15 years or so.) They are also throwing in stuff like credits for "buying a new home and upgrading an existing home with energy-efficient doors, windows, furnaces and other appliances". But, again, there's not that many new houses bought, and the people buying them are mostly not families of 4 making under $50K. Nor are those families running out to spend thousands, or tens of thousands, of dollars on home upgrades. Finally, this argument also ignores the fact that most of the social safety net programs are paid for from payroll taxes, not income taxes.
• klochner 16y ago
  but what are they earning? I don't see a problem if someone making $30k/year isn't paying any taxes, especially if that someone is a single parent.
  • jessriedel 16y ago
    Really? Let's put aside the single-parent part. Last year I made about $25,000. I enjoyed the protection of the US military, was treated at hospitals using techniques developed with federal funding, and benefited from the federal regulation of interstate commerce. I also had a nice room in a shared house in Santa Barbara, CA. I had a car, ate healthy food, went out to bars, and lounged on the beach. Why shouldn't I have had to pay taxes?
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    • seanalltogether 16y ago
      Oh but you did pay taxes. The cost of your rent is directly tied to the amount of property tax that house owner is required to pay. All the goods you purchased would have been taxed as well. The gas you bought for your car helped pay for the roads. You may not have paid a federal income tax (I don't know if that is true though) but you still paid social security taxes, and your employer paid payroll taxes that factor in to how much you get paid.
      • jessriedel 16y ago
        > The cost of your rent is directly tied to the amount of property tax that house owner is required to pay. All the goods you purchased would have been taxed as well. Well, we were talking about federal taxes. That's why I listed services of the federal government. Property and sales tax are state. Social security and gas axes are supposed to be a closed systems. None of those pay for the military, interstate commerce regulation, or medical research. But the important thing is that I wasn't claiming I didn't pay taxes. (I did, although not much.) I was challenging the notion that I shouldn't be paying taxes just because I make less thank $30k.
• protomyth 16y ago
  Barring a study in economics, this is why you generally want politicians who have done the budget cycle at a lower level (mayor to governor). Military Generals also tend to get it.
• deleted 16y ago
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• asmithmd1 16y ago
  But they are not including payroll tax of %15.3 that is paid on every dollar of income UNDER $106,000 They call this tax Social Security but it is just a tax like any other.
  • anamax 16y ago
    > They call this tax Social Security but it is just a tax like any other. SSI is collected like a tax, but, unlike almost every other tax, the money collected is mostly returned to the payer. (Folks who didn't pay much get much better return than folks who paid a lot.)
    • _delirium 16y ago
      This will only be true if, as seems increasingly unlikely, the social-security surpluses accumulated over the past few decades are actually used to fund social security (the mythical "lockbox"). My bet is on the money never being returned to the social-security system. In that case, the surplus portion of the payroll taxes from the past few decades should be historically reclassified as (regressive) general income taxes.
    • krschultz 16y ago
      But it is also the only regressive tax we have, as all income over a certain amount is untaxed. So it ends up being a really complicated curve of who gets what return on their money, so the super rich and the super poor get the best deal, while the middle class gets hosed.
• rstocker99 16y ago
  I'm not sure the problem is that most politicians don't have a decent grasp of the power of incentives or lack a basic understanding in economics. Unfortunately I think they are in fact extremely adept at understanding incentive. Is it possible that you haven't carefully considered which incentives are driving their behaviour :).
• gamble 16y ago
  The last thing this world needs is more people in positions of power who think that ECON 101 is all they need to know about economics.