The post-fact universe has arrived

[LightSpectra]

State government can never be any good at welfare. They are legally required to suck at it. Many of the other things the feds do they do because having 50 states do things 50 ways is the worst way to get it done.

If the states suck at it, it's because the potential income from taxation is overwhelmingly limited by how the federal government already taxes a huge portion of most peoples' incomes.

The main problem with social programs not being handled at a more local level is that different people of different areas have vastly different needs. Like, let's say the goal is to cut down on consuming gasoline; it's fine and dandy for a very urban city to accomplish this by raising gas taxes and using that income to make more public transportation, but that would financially devastate a rural area where public transportation isn't feasible. The federal government is incapable of making such distinctions because its programs have to be very general and universally applicable.

A less significant but still notable problem is that every layer of bureaucracy is another layer of regulations and bureaucrats. So not only is the federal government worse at implementing social programs, it's also more expensive, cumbersome and slow when they do it.

 

[Cutlass]

If the states suck at it, it's because the potential income from taxation is overwhelmingly limited by how the federal government already taxes a huge portion of most peoples' incomes.

The main problem with social programs not being handled at a more local level is that different people of different areas have vastly different needs. Like, let's say the goal is to cut down on consuming gasoline; it's fine and dandy for a very urban city to accomplish this by raising gas taxes and using that income to make more public transportation, but that would financially devastate a rural area where public transportation isn't feasible. The federal government is incapable of making such distinctions because its programs have to be very general and universally applicable.

A less significant but still notable problem is that every layer of bureaucracy is another layer of regulations and bureaucrats. So not only is the federal government worse at implementing social programs, it's also more expensive, cumbersome and slow when they do it.

Romney is paying 14% of his income in taxes. And that's just the years he will release. And at that he had to work for months to manipulate his income to appear to be paying that much. So what "huge portion" of income is being taxed? Most of the states have an income tax. And the state and local governments combined tax nearly as much as the feds.


The main problem with social programs not being handled at a less local level is that the local governments are far more likely to screw over the poor for other political considerations. Particularly race to the bottom economic competitions. But racism has been a major factor as well. And there is the overwhelming problem that only the federal government can match spending to need when the economy goes south through deficit spending. The feds are also far better in keeping the bureaucracy to a minimum so there is much less dead weight loss to the system. Rural poor may not have mass transit to use, but their housing is far cheaper in most places. The feds have no problem whatsoever in adjusting benefits by local conditions. They do that in a number of other programs. It's really simple, if that is what you want to do.

In short, every one of your points is wrong.

 

[hobbsyoyo]

The main problem with social programs not being handled at a less local level is that the local governments are far more likely to screw over the poor for other political considerations. Particularly race to the bottom economic competitions. But racism has been a major factor as well.

What do you mean here and do you have any examples?

 

[LightSpectra]

Romney is paying 14% of his income in taxes. And that's just the years he will release. And at that he had to work for months to manipulate his income to appear to be paying that much. So what "huge portion" of income is being taxed? Most of the states have an income tax. And the state and local governments combined tax nearly as much as the feds.

Romney gets high-class lawyers that find him tax loopholes for him; in addition to the fact that he didn't really pay income tax but windfall penalties. Middle and lower class people don't benefit from that. To use myself as an example: I'm paid $1,250 biweekly, but I lose $200 to federal taxes and $50 to state taxes. 20% doesn't sound like a lot, but the cost of living is really high where I am. I give most of what I have leftover to charity, but that's not much. It's a good thing I'm currently not raising children or have a crippling medical disability. Most of the people where I live, due to the high taxes, have to live in cramped bug-infested apartments where being ripped off is normal. And all those people are above the poverty line. The money that we lose to federal taxes don't benefit us as much as the local taxes that go to transportation, despite being a fourth as high.

The main problem with social programs not being handled at a less local level is that the local governments are far more likely to screw over the poor for other political considerations. Particularly race to the bottom economic competitions. But racism has been a major factor as well. And there is the overwhelming problem that only the federal government can match spending to need when the economy goes south through deficit spending. The feds are also far better in keeping the bureaucracy to a minimum so there is much less dead weight loss to the system. Rural poor may not have mass transit to use, but their housing is far cheaper in most places. The feds have no problem whatsoever in adjusting benefits by local conditions. They do that in a number of other programs. It's really simple, if that is what you want to do.

I'll see your citations that (a) the federal government has less bureaucratic deadweight and (b) is more flexible for handling more individualized problems.

 

[Cutlass]

Romney gets high-class lawyers that find him tax loopholes to avoid paying taxes. Middle and lower class people don't benefit from that. To use myself as an example: I'm paid $1,250 biweekly, but I lose $200 to federal taxes and $50 to state taxes. 20% doesn't sound like a lot, but the cost of living is really high where I am. I give most of what I have leftover to charity, but that's not much. It's a good thing I'm currently not raising children or have a crippling medical disability. Most of the people where I live, due to the high taxes, have to live in bug-infested apartments where being ripped off is normal.

I wouldn't call 20% high. Maybe it's not comfortable in your situation. But the one and only way for you to pay less at your income is for the wealthy to pay a great deal more. You aren't really going to save yourself money by increasing poverty and desperation on the part of those worse off than you are.

I'll see your citations that (a) the federal government has less bureaucratic deadweight and (b) is more flexible for handling more individualized problems.

Look at the overhead of Social Security compared to the overhead of any state income support program. Whether it is more flexible is a moot point because nearly all the programs are joint fed/state/local programs. And the driver of the overhead costs is the local components and the fact that there are 2-3 components instead of one. As for whether they could be, that's a political choice. The US Census knows what the costs of living are on each block in the US, much less each town. And when they are hiring census workers, they certainly pay a scale that is adjusted for local costs of living, as they do with all federal workers. So this is something they already do. There is no reason other than political choice for them to not expand what they already do to other programs.

What do you mean here and do you have any examples?

However, there were important differences among state responses. States that were politically conservative and those that had large numbers of African Americans on their welfare rolls tended to adopt policies-such as stricter time limits, work requirements, and sanctions—that made assistance less attractive and less widely available. Contrary to the hopes of some welfare reform proponents, the new welfare law does not seem to have dissipated the image of the program as disproportionately aiding minorities, or the negative impact that this image has on support for the program in many states.

Rest of report HERE Now this is a 2002 report. And they indicated that Race to the Bottom isn't as prevalent in better economic times. But still a major concern for bad times.

 

[LightSpectra]

I wouldn't call 20% high. Maybe it's not comfortable in your situation.

???

But the one and only way for you to pay less at your income is for the wealthy to pay a great deal more. You aren't really going to save yourself money by increasing poverty and desperation on the part of those worse off than you are.

Er, that's precisely my point. Factoring in transportation necessities, regional cost of living and other such things makes it far too complicated for the federal government to do on an individual level. Hence why tax brackets exist, even though two people with the same income and tax bracket are going to have a totally different standard of living. Just because the census nominally accounts for these things doesn't mean it does a good job of doing that.

Look at the overhead of Social Security compared to the overhead of any state income support program. Whether it is more flexible is a moot point because nearly all the programs are joint fed/state/local programs. And the driver of the overhead costs is the local components and the fact that there are 2-3 components instead of one. As for whether they could be, that's a political choice. The US Census knows what the costs of living are on each block in the US, much less each town. And when they are hiring census workers, they certainly pay a scale that is adjusted for local costs of living, as they do with all federal workers. So this is something they already do. There is no reason other than political choice for them to not expand what they already do to other programs.

Explain what you mean by "the driver of the overhead costs is the local components and the fact that there are 2-3 components instead of one"?

 

[hobbsyoyo]

Thanks Cutlass.

 

[dutchfire]

This is how it works in the US. Businesses don't pay taxes when they are making losses. They only pay on profits, which leads to misleading accounting tricks, but that's another issue.

Another point for reasonableness for the US.
USA #1!

 

[WindFish]

Another point for reasonableness for the US.
USA #1!

FYI

Its not a misleading accounting trick

Its a perfectly reasonable and legal accounting process

 

[say1988]

This is how it works in the US. Businesses don't pay taxes when they are making losses. They only pay on profits, which leads to misleading accounting tricks, but that's another issue.

Not entirely true. It is very much possible to have a profit for tax purposes, but a loss in reality.But usually that isn't consistently the case and features years before or after that have lower taxable incomes than actual.
I would also note that there are tax credits for business losses that can be carried forward/back. This means there is a reduction in risk for businesses that have both losses and profits.

Now, while taxes are unlikely to push you into a loss position what they can do is make your return too small to be viable. In unincorporated businesses too little return means you are not making enough money personally to sustain yourself, such as if I have a profit of $10,000 but need drawings of $25,000 to provide basic necessities (food, shelter, utilities, transportation) as you cannot pay yourself a tax deductible salary. The other situation is most larger corporations have a required rate of return for any segment (usually based on how much investors demand and/or potential returns of investment elsewhere) and taxes can and do push projects below that threshold.

That said, I taxes as a cause of business failure are horribly overused for two main reasons:
1) It takes the blame away from the business owner.manager for the business failing ("It's not my fault, I would have been successful if not for the greedy government").
2) It creates a nice story to rail on about to voters.

 

[dutchfire]

Not entirely true. It is very much possible to have a profit for tax purposes, but a loss in reality.But usually that isn't consistently the case and features years before or after that have lower taxable incomes than actual.
I would also note that there are tax credits for business losses that can be carried forward/back. This means there is a reduction in risk for businesses that have both losses and profits.

Now, while taxes are unlikely to push you into a loss position what they can do is make your return too small to be viable. In unincorporated businesses too little return means you are not making enough money personally to sustain yourself, such as if I have a profit of $10,000 but need drawings of $25,000 to provide basic necessities (food, shelter, utilities, transportation) as you cannot pay yourself a tax deductible salary. The other situation is most larger corporations have a required rate of return for any segment (usually based on how much investors demand and/or potential returns of investment elsewhere) and taxes can and do push projects below that threshold.

That said, I taxes as a cause of business failure are horribly overused for two main reasons:
1) It takes the blame away from the business owner.manager for the business failing ("It's not my fault, I would have been successful if not for the greedy government").
2) It creates a nice story to rail on about to voters.

I did want to put something in my original post about how the first X dollars should probably be taxed less, to provide for the necessary income of the owner, but I forgot.

 

[hobbsyoyo]

Not entirely true. It is very much possible to have a profit for tax purposes, but a loss in reality.

To clarify:
What I was talking about was corporations having profits in reality and losses for tax purposes.

But I won't try and argue my point as I'm not expert. That's just what I learned last week in my business accounting class 2 weeks ago and I thought I'd share it.

 

[say1988]

To clarify:
What I was talking about was corporations having profits in reality and losses for tax purposes.

But I won't try and argue my point as I'm not expert. That's just what I learned last week in my business accounting class 2 weeks ago and I thought I'd share it.

You can have both cases because the government has to set some standards to limit the corporations screwing with the numbers (though they still do with crap like LIFO inventory). This results in taxable and accounting income being different. In addition, due to estimates and accruals neither income necessarily provide an actual picture of the company as they ignore cash flows.

Over the long term it generally balances out (for example amortization is equal over the longer of the accounting and tax life), but a few remain (the aforementioned LIFO and some non-deductible expenses).

I did forget to mention that a potential issue is cash flows. Taxes could cause a profitable corporation to become insolvent if they have cash flow issues. But if that is the case, the company must have been in trouble to begin with.

 

[WindFish]

But if that is the case, the company must have been in trouble to begin with.

Depends on the nature of the business, it is possible to be a "profitable" company with a tight cashflow.

Also using LIFO to value inventory is illegal in almost every country.

 

[hobbsyoyo]

FIFO/LIFO is what we covered and is specifically what I was talking about.

@Windfish, our professor didn't say it was illegal here and she's good about that stuff. Plus we had to learn it.

 

[WindFish]

FIFO/LIFO is what we covered.

At Windfish, our professor didn't say it was illegal here.

LIFO inventories is only used in the United States and Japan.

I use AVCO tbh since that is more acceptable than FIFO

 

[dutchfire]

Another point for reasonableness for the US.
USA #1!

LIFO inventories is only used in the United States and Japan.

I use AVCO tbh since that is more acceptable than FIFO

And you have lost that point again.

 

[hobbsyoyo]

LIFO inventories is only used in the United States and Japan.

I use AVCO tbh since that is more acceptable than FIFO

So it's legal in what, more than a third of the global economy?

But yeah LIFO is what I was talking about when I said 'dirty tricks' or whatever it was that I posted. And I'm terribly American-centric so you'll have to excuse my blatant, unforgiveable USA #1 attitude/approach to analyzing situations.

 

[WindFish]

So it's legal in what, more than a third of the global economy?

40%

With teh EU and China making up another 40%

But yeah LIFO is what I was talking about when I said 'dirty tricks' or whatever it was that I posted. And I'm terribly American-centric so you'll have to excuse my blatant, unforgiveable USA #1 attitude/approach to analyzing situations.

Its cool, just please understand that I was taught to deal and trade with Eurocommies so I have to follow the nannystate rules.

However, I'm surprised that LIFO is used in the USA tbh

 

[hobbsyoyo]

However, I'm surprised that LIFO is used in the USA tbh

Mitt Romney pays 14% income tax. How is LIFO in the US a surprise in light of that fact?