Analysis of Trump''s Tax Plan

This act was a welfare cut plain and simple. You may agree with the areas cut inside of the bill, but it does demonstrate that when you stop subsidizing lousy behavior, good results manifest. It's unfortunate that so many of these reforms were written over later on. The bill did increase child care, but most of the drop in child poverty is attributable to the increase in single mother employment. (More on this coming up) Why have I wasted my time showing evidence welfare cuts effect on single motherhood? There was a 14-month bipartisan study conducted by the Brookings Institute in conjunction with the AEI that looked into the causes of poverty. In this study, they heavily relied on the scholarly work of Bell Sawhill. She is the expert on child poverty at the left-wing Brookings Institute.

For every child lifted out of poverty by a social program, another one is entering poverty as a result of the continued breakdown of the American family. If we could turn back the marriage clock to 1970, before the sharp rise in divorce and single parenthood began, the child poverty rate would be 20 percent lower than it is now.

Wow. After reading this quote, I wanted to figure how badly the social structure had been affected by these programs.

The casual reader still may be confused. I have proved correlation and some causation, but perhaps they are still confused how welfare policies affect the social fabric. The programs that exist inside of welfare encourage single motherhood. To quote Heritage(you used cbpp, I can use Heritage).

When the War on Poverty began, only a single welfare program—Aid to Families with Dependent Children (AFDC)—assisted single parents. Today, dozens of programs provide benefits to families with children, including the Earned Income Tax Credit (EITC), Temporary Assistance for Needy Families (TANF), the Women, Infants and Children (WIC) food program, Supplemental Security Income (SSI), food stamps, child nutrition programs, public housing and Section 8 housing, and Medicaid.

First, means-tested welfare programs such as those described above financially enable single parenthood. It is difficult for single mothers with a high school degree or less to support children without the aid of another parent. Means-tested welfare programs substantially reduce this difficulty by providing extensive support to single parents. Welfare thereby reduces the financial need for marriage. Since the beginning of the War on Poverty, less-educated mothers have increasingly become married to the welfare state and to the U.S. taxpayer rather than to the fathers of their children.

For example, a single mother with two children who earns $15,000 per year would generally receive around $5,200 per year of food stamp benefits. However, if she marries a father with the same earnings level, her food stamps would be cut to zero. A single mother receiving benefits from Section 8 or public housing would receive a subsidy worth on average around $11,000 per year if she was not employed, but if she marries a man earning $20,000 per year, these benefits would be cut nearly in half. Both food stamps and housing programs provide very real financial incentives for couples to remain separate and unmarried.

So, to conclude on child poverty. While welfare has decreased child poverty in some respect, the adverse effects on the social fabric has wholly counteracted this positive. Overall, welfare programs have had a negative impact on self-sufficiency and child poverty, due to their corrosive marriage-killing effects. Lazybones now tells me the numbers of all of those lifted out of poverty due to social programs.

Add that 4 million to the almost 10 million adults and 5 million children lifted out of poverty due to the EITC+Child Tax Credits, and you've got almost 20 million out of poverty who would not be otherwise. When you add the remaining federal assistance programs, this number rises to 40 million according to the CBPF (citing the Census Bureau). And when you add in the 30 million who have been made "less poor" as shown on the first chart that you responded to, the total number helped by these programs balloons to 70 million. It's possible that if EITC and the like were expanded, then those 30 million "less poor" people would finally be able to leave poverty.

I would have to have down syndrome to believe that welfare has not lifted people out of poverty. I, just, do not think it is the best method to achieve these results. Welfare subsidizes poor behavior and does not encourage people to leave the poverty line as demonstrated by the Anchored Supplemental Poverty Measure Before Taxes and Transfers. But if we want to do the math here, let's go for it. 4 million people lifted out of poverty due to SNAP. The problem with these analyses is that they do not assume that the tax burden without these programs would be drastically number. From, this point forward, we are going to be getting super speculative. The National Priorities Center has been kind enough to provide an estimated tax receipt. So, I will be using this to assume the amount of money the average American saves without these programs. I will also do this with low-income Americans using the payroll tax. So, the average American pays $14,051 in Federal Income Taxes. Out of that number 1,735.64 goes to Medicaid, $368.10 for SNAP (food stamps), $77.48 for Temporary Assistance for Needy Families. These were all of the Federal Assistance Programs labeled. This adds up to $2181.22 in tax relief just in Federal Income Taxes alone. You may look at this and say isn't this great you've only made the rich richer. But this surge and income go beyond only the average middle-class American. According to the Institute on Taxation and Economic Policy, the lowest-income quintile — those making less than $19,000 a year — pay almost 11 percent of their income in state and local taxes. So, that is another big boost in revenue. This is just for welfare programs, but the poor mainly pay their income in payroll taxes. If we wanted to get people out of poverty, we would just eliminate the social security tax. All of this far supersedes the grants provided by EITC and CTC. The average SNAP grant is 1,500 dollars a year. This grant is still less than the amount of money which would be gained from removing this program+social security. So, all in all, the average American would receive huge tax relief, the poor would probably break even in tax relief when you include the CTC, and other federal programs. But wait. There is more. We have not even covered the increased savings rate or the real income growth. In past years, growth in real income always necessitated sharp drops in poverty. This trend remains true in other countries around the world. To quote the OCED,

Research that compares the experiences of a wide range of developing countries finds consistently strong evidence that rapid and sustained growth is the single most important way to reduce poverty. A typical estimate from these cross-country studies is that a 10 percent increase in a country’s average income will reduce the poverty rate by between 20 and 30 percent.

According to your data, real income among the poor has increased about 29% excluding benefits. In past years, such increases are synonymous with less impoverished citizens. Due to the excessive welfare expenditures, this trend has changed as illustrated by the Anchored Supplemental Poverty Rate Before Taxes and Transfers. So, while social programs have decreased poverty it is not clear that such decreases could not be achieved through other means. To continue on this notion, I will look at the work of the economist John C. Goodman. There are four ways to discourage poverty that are accepted by the economic community to reduce poverty. There was a well-known bipartisan study conducted by the Brookings Institute with the AEI that was designed to find the cures for poverty. It was administered by Jonathan Haidt. So, I would not say it is really all that partisan. They found four steps that severely limit poverty. The study found four steps which one can follow if they do not want to be impoverished.

Step one: Finish Highschool

Step two: Get a job,

Step three: Get married, and

Step four: Don’t have children until you get married.

Goodman focused on point two first. How does welfare affect job rates? Goodman quotes a study which was conducted before the War on Poverty began,

The experiments were all controlled. Randomly selected people were assigned to a "control group" and an "experimental group." The latter received a guaranteed income, and the program even used Milton Friedman's term for it: a negative income tax. The largest, longest and best-evaluated of these experiments was SIME/DIME (Seattle Income Maintenance Experiment/Denver Income Maintenance Experiment) in Seattle and Denver. And the results were not pretty. To the dismay of the researchers, they largely confirmed what conventional wisdom had thought all along. As I reported in "Privatizing the Welfare State":

The number of hours worked dropped 9% for husbands and 20% for wives, relative to the control group. For young male adults, it dropped 43% more. The length of unemployment increased 27% among husbands and 42% for wives, relative to the control group. For single female heads of households, it increased 60% more. Divorce increased 36% more among whites and 42% more among blacks. (In a New Jersey experiment, the divorce rate was 84% higher among Hispanics.)

As Goodman notes, these results have been studied ad nauseam throughout history without any real objection. To quote Goodman,

Both authors point out that the results are even worse than they at first appear. For one thing, the "control group" had access to conventional welfare available in the 60s and 70s. So this was by no means a pure (welfare free) control group. Also, the enrollees were given different instructions about how long they could expect their guaranteed income to last. It turns out that the longer the guarantee, the worse the negative effects.

I think the only of the four steps that welfare does not affect is high school dropout rates. I have one last note I would like to address before moving on to the next point. From the end of World War II until 1964 the poverty rate in this country was cut in half. Further, 94% of the change in the poverty rate over this period can be explained by changes in per capita income alone. Given all of the economic growth that has transpired between 1964 and today, poverty should be a non-factor.

Of course, I would never expect poverty to fall so sharply, mainly due to inflation, it does speak volumes. I, expect, you are going to counter be explanation the wage-productivity gap, but I will address that down below. To conclude, it is disingenuous to tout the CBPP's graph as evidence of the War on Poverty's success. It does not include all of the taxes which welfare levies on the populous and the negative social effects which have drastic effects on poverty. Now, Lazybones explains that the welfare reforms were not cuts.

It's inaccurate to call the 1996 Welfare Reforms "cuts". After all, the War on Poverty measures remained intact and welfare spending continued to grow afterwards. What the welfare reform s did was establish strong welfare to work incentives and expand the EITC. These measures were broadly successful at making the welfare system a better ladder out of poverty, and the drop in poverty afterwards simply show the efficacy of a disciplined welfare state.

I have already addressed all of these points in the post above, so I will simply reiterate the findings. The 1996 Welfare Reforms were cuts by definition. The welfare reform did not expand the EITC, that happened in 1993. It did, however, extend the CTC. The ladder out of poverty was due to the spending cuts and the return to some of the old social norms. Alright, on to the next point.

Originally posted by lazybones
Well, if we want to assess the effect that welfare payments are having on poverty, then it makes sense to include them in our figures. And when we do, the results are quite stunning. And although I accept that non-welfare earnings have not been rising to the same degree, this can be explained by wages lagging severely behind productivity and inflation increases. In that way, welfare is an essential fortification of people's incomes against these negative trends.

I'll start off with the simple points. The inclusion of the benefits depends on the context of the discussion. I was pointing out that welfare has not changed behavior in a positive light. I have, amply, covered this above. The wage-productivity gap is an economic myth. James Sherk did an excellent job addressing this concern, I will report his findings. There are three errors which the wage-productivity charts possess.

1.Compare the pay of only some workers to the productivity of all employees;
2.Count productivity growth of the self-employed, but exclude their pay growth;
3.Measure inflation differently to calculate pay growth and productivity growth.

If we correct for those errors, the entire gap goes away. Before, I show the data I want to explain how this whole myth makes no sense in theory. If I pay a worker lower this his productivity dictates, another firm will hire him. It makes no economic sense to underpay workers as long as there is competition. This is why 95% of workers are paid above the minimum wage.

The chart I am sure you are referring too is the one generated by the EPI.

Sherk replicated the EPI's methodology for the non-farm business sector.

Sherk notes the problems with this analysis,

EPI’s reports juxtapose a measure of payroll-survey-based employee compensation with net productivity growth since 1948. EPI shows pay growth closely tracking productivity growth until the early 1970s; then pay growth stalls while productivity continues to increase.

The highlighted rows in Table 1 and the top and bottom lines of Chart 3 replicate EPI’s methodology for the non-farm business sector. (EPI’s reports typically include the government and nonprofit sectors, for which productivity is conceptually difficult to measure.)[10] EPI’s approach shows productivity growing 91 percent since 1973, while employee compensation has only grown 10 percent.

The notion of the wage productivity-gap is widely rejected in the academic field.

Harvard professor Martin Feldstein, the former president of the National Bureau of Economic Research, concluded that the apparent divergence results from comparing the wrong data.[12] Using the correct data, he finds that pay and productivity have both grown together. Staff at the Federal Reserve Bank of St. Louis found the same result.Even prominent liberal economists who have examined this question agree. Dean Baker, director of the Center for Economic and Policy Research, finds that pay growth tracks productivity growth when comparing the same groups of workers and using the same measure of inflation.[14] Harvard professor Robert Lawrence served on President Bill Clinton’s Council of Economic Advisers; he comes to the same conclusion.[15] George Washington University professor Stephen Rose—a former Clinton Administration Labor Department official currently affiliated with the Urban Institute—likewise finds that the apparent gap between pay and productivity collapses under scrutiny.[16] He concludes that productivity growth continues to benefit working Americans.

As mentioned above, one of the main reasons that studies show this gap is due to control groups used and the methodology of compensation.

A major reason why some studies show a gap between pay and productivity is that they compare different groups of employees and ignore a portion of employees’ compensation. These studies measure the productivity of all employees as well as the self-employed. However, they only consider the compensation of some employees: private-sector “production and non-supervisory employees” covered by the Bureau of Labor Statistics (BLS) payroll survey.

Sherk goes way deeper into this subject: http://www.heritage.org/jobs-and-labor/report/workers-compensation-growing-along-productivity But this all that is necessary for this post. Moving on.

This is not accurate for a number of reasons. First off, transfers to individuals in the form of credits and entitlements actually produce a net positive economic return, sometimes as high as 2:1. This, by the way, makes a targeted EITC or Medicaid expansion vastly more effective than any corporate tax cut or tax cuts to the middle-upper classes. Secondly, targeted welfare expansions have been shown to increase the number in work. This was seen in the 90s, when an EITC expansion coaxed single mothers out of unemployment. Thirdly, welfare payments such as the EITC made early in life have a profound impact on a child's prospects, so they certainly could be described as a trampoline.

The only economic return is giving people money. To quote Lao Tzu,

Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.

I have addressed all of the points in this post above. Moving on.

This is another economic myth. I have already addressed the fact that GDP does not include investment, but there are still more flaws to uncover. If you have taken any introductory macro class you know the formula for GDP.

GDP = C + I + G + NX,

C and I are consumption and private investment. G is government spending and NX is net expenditures. Even if we dismiss all of the difficulties that go into finding these figures it is still just accounting jargon, not actual economic theory. An increase in G is going to increase GDP, ceteris paribus. This issue here is that the argument rests on ceteris paribus. To quote the Austrian economist Bob Murphy,

In contrast, the typical Austrian- or Chicago-school economist will say that an increase in G will tend to make private-sector spending fall by a greater amount, so that a dollar of extra government spending will cause GDP to fall. (We could get the confident support of free-market economists for this conclusion if we stipulate that the extra government spending is financed through higher taxes, which destroy more private after-tax income than they raise in extra revenue.)

Even if we assume that the decrease in G does not raise GDP, that still does not mean we should advocate government spending. 10 million dollars spent by a politician are less effective than 10 million dollars spent in the market. If the Keynesian multiplier was accurate, then the Sequester would have much more dire consequences. To quote Murphy,

For example, the firm Macroeconomic Advisers, using a Keynesian model, predicted that the spending cuts would knock 1.3 percentage points off of second quarter 2013 growth, and 0.6 percentage points off of third quarter 2013 growth. Here’s what really happened:

I can go way deeper into the myth of the Keynesian multiplier, but I'll just link this podcast: https://www.youtube.com/watch?v=ixvhQAIiinI

Lazybones posts two more graphics which essentially reiterate the points he makes above. No need to make this post longer then it already is. Lazybones then tries to refute my example of the free market decreasing poverty.

Some issues here:

- Using poverty rates from 70-100 years ago is going to run into problems due to the immense social changes that have occurred since then, notably the decline of marriage. The way that poverty is classified has also changed.

- 27% poverty is about where we would be if no welfare programs were in place, so this just underlines the crucial need for welfare.

- The US economy was booming in the aftermath of World War 2, due to the devastation of Europe and America's domination of export markets. So a 27% poverty rate is pretty horrendous.

Point 1: The way we measure poverty has changed but it still indicates a decrease in impoverished citizens and the way we measure real income has not really changed at all. The decline of marriage rests on the shoulders of welfare.

Point 2: This is obviously not true as addressed above.

Point 3: The economic boom of WW2 is another economic myth perpetuated by the neocons. Here is a video which details this myth: https://www.youtube.com/watch?v=71tPBjrTeJU

Be that as it may, it does not change the fact that welfare payments have lifted more than 4 million Californians out of poverty. Consult tables at the bottom of this article.

https://www.cbpp.org/research/pover...viously-thought

As I have said repeatedly, I do not deny that welfare helps poverty. I just do no think i is the best method to achieve these results. Well, that concludes my counters now, I will spend some time to respond to some common objections/questions.

Question/objection 1: Well, maybe you are right that welfare negatively effects the social fabric, why not just reform welfare rather than abolish it outright?
There is this wonderful article that details the spending reasons: https://fee.org/articles/the-welfare-state-needs-abolition-not-reform/ But spending is not the only reason we should eliminate welfare. The issue for me is the fact that welfare is nigh impossible to cut because people have become attached the myriad benefits meaningfully. Perhaps the most significant incentive welfare programs provide is the income which one receives on welfare juxtaposed to the income received in the job market. As of 2013, Welfare pays more than a minimum-wage job in 35 states, even after accounting for the Earned Income Tax Credit, and in 13 states it pays more than $15 per hour. These benefits are consistently increasing which of course explains the greater number of enrollees. In 11 states, welfare pays more than the average pretax first-year wage for a teacher. In 39 states it pays more than the starting wage for a secretary. And, in the three most generous states a person on welfare can take home more money than an entry-level computer programmer. If you have that many benefits, it is challenging to take that away from people. Any reform will just be compounded by complaints which will entail future boosts in interests.

Question/Objection 2: How will welfare be provided with the welfare state?

I'll just link two articles which address this point as this post is already way too long.

http://www.thedailybell.com/editorials/richard-ebeling-a-world-without-the-welfare-state/

https://mises.org/library/welfare-welfare-state

That is about it. This post was really fun for me, feel free to plagiarize.

Well that was boring.

I want to make one correction: I used the wrong child poverty graph in the first post. Here is the correct one:

Christ, you've given me a lot to respond to. Not sure if I'll be able to get back until after Christmas, but I'll see what happens . Alhough just one quick thing: you address the productivity vs wage trend quite well, but what about wages vs inflation? Inflation in many years has outpaced wage growth, thus shredding many increases. Thus, by drastically reducing or abolishing welfare, you would leave many individuals at the mercy of wage increases always staying above inflation, which they haven't been doing.

And I'm not sure me using the CBPP warrants the use of the Heritage Foundation, who notoriously claimed that the Bush tax cuts would near-eliminate the national debt. Haven't heard anything even comparably crazy to that from the CBPP.

Originally posted by lazybones
Christ, you've given me a lot to respond to. Not sure if I'll be able to get back until after Christmas, but I'll see what happens . Alhough just one quick thing: you address the productivity vs wage trend quite well, but what about wages vs inflation? Inflation in many years has outpaced wage growth, thus shredding many increases. Thus, by drastically reducing or abolishing welfare, you would leave many individuals at the mercy of wage increases always staying above inflation, which they haven't been doing.

And I'm not sure me using the CBPP warrants the use of the Heritage Foundation, who notoriously claimed that the Bush tax cuts would near-eliminate the national debt. Haven't heard anything even comparably crazy to that from the CBPP.

You could just submit that the welfare state sucks. As far as inflation goes, I am inclined to agree with you. The issue then presides with the FED. I never used anything egregious from Heritage, and I vetted the sources as well. Also the graphs I did use the account for inflation. I agree money is non-neutral, but the markets do catch up.

I just can't get over the Tiny Tim thing lol. They literally say Tiny Tim. Lunatics.

A Christmas Carol is about a PRIVATE citizen donating to charity lol. It is not about the government f*cking over dying children. I'm shocked they didn't have a blown up picture in the background of Jimmy Kimmel holding his baby while crying, just to sell it even more.

Watch Liberals Support the GOP Tax Plan… After Being Told It Came From Bernie Sanders

😆

"It's all just rational with Bernie, with Trump it's not" - Unnamed Genius

"I miss Bernie now more than ever" -Unnamed Genius

Pretty misleading as the guy only read out the very best provisions and left all the trashy bits out. Like how the chained CPI measure will increase middle class taxes over time, and how the personal tax breaks will expire in 8 years while the corporate cuts stay. And it's not surprising that liberals would react positively to the mentioned provisions as some (child tax credit expansion) were proposed by liberal politicians like Clinton before.and lifted by the GOP to make this plan sound rosy. If the nasty parts were included, then it'd sound like a distinctly Republican plan.

Originally posted by lazybones
Pretty misleading as the guy only read out the very best provisions and left all the trashy bits out. Like how the chained CPI measure will increase middle class taxes over time, and how the personal tax breaks will expire in 8 years while the corporate cuts stay. And it's not surprising that liberals would react positively to the mentioned provisions as some (child tax credit expansion) were proposed by liberal politicians like Clinton before.and lifted by the GOP to make this plan sound rosy. If the nasty parts were included, then it'd sound like a distinctly Republican plan.

And yet, they seem to know nothing about a tax plan they hate, until another name is put on it lol. It's deeply sad.

And how is it any more or less misleading than the media who only talk about the nasty bits? I'd love for your response to this question to be "Surtur, it is indeed not any more or less misleading".

Originally posted by lazybones
Pretty misleading as the guy only read out the very best provisions and left all the trashy bits out. Like how the chained CPI measure will increase middle class taxes over time, and how the personal tax breaks will expire in 8 years while the corporate cuts stay. And it's not surprising that liberals would react positively to the mentioned provisions as some (child tax credit expansion) were proposed by liberal politicians like Clinton before.and lifted by the GOP to make this plan sound rosy. If the nasty parts were included, then it'd sound like a distinctly Republican plan.

This is true. 👆

Like I said, the media misleads in the opposite direction. IMO it'd be super duper sweet if nobody mislead anyone.

I do like how Robbie pretty much stated that the Democrats pretty much make up their Laws on the standings of Fear, Hate ,and Jealousy.

Originally posted by Surtur
Watch Liberals Support the GOP Tax Plan… After Being Told It Came From Bernie Sanders

😆

haermm

crylaugh

Dis my shit, right here.

pained

Feels good, man. grouchoawe

FRANKENSTEIN STRIKES: More Companies Announce Bonuses, Wage Increases and Expansion, Thanks to Tax Reform

"If this destructive misery continues apace, I'm not sure there will be a single American still alive by the end of the holiday season. You've heard the terrible news about Boeing, Fifth Third Comcast, Wells Fargo, AT&T -- all of which are celebrating passage of the tax reform bill by some combination of paying out bonuses to non-executive employees, expanding their businesses, stepping up charitable investments, and raising their hourly wage. The Washington Post also chronicles CVS' pledge to hire 3,000 workers into permanent new jobs. But the devastation doesn't end there. Texas:

Rush Enterprises, Inc., which operates the largest network of commercial vehicle dealerships in North America, today announced that as a result of recent tax reform legislation, it will provide a one-time $1,000 gift to its approximately 6,600 employees in the United States. “We believe tax reform to be beneficial for Rush Enterprises, our communities and overall economic growth,” said W.M. “Rusty” Rush, Chairman, Chief Executive Officer and President of Rush Enterprises, Inc. “We are happy to take this step to invest in our employees and honor their important contributions to our company with this $1,000 gift,” he added. The $1,000 discretionary bonus will be paid to all Rush Enterprises, Inc. employees once the President signs the tax reform bill into law. "

Originally posted by Surtur
And yet, they seem to know nothing about a tax plan they hate, until another name is put on it lol. It's deeply sad.

Originally posted by Surtur
And how is it any more or less misleading than the media who only talk about the nasty bits? I'd love for your response to this question to be "Surtur, it is indeed not any more or less misleading". [/B]

Your deflection is both based on imagination. Maybe if you bothered to read past headlines, you'd stop misrepresenting what the media outlets you criticize say.

But they had no clue of ANY of the details obviously lol, try again.

And yes, the media is doing the opposite, acting like this is the end of the world. It's not. It's not the best thing ever, nor is it the worst thing ever, period.