Text 14384, 84 rader
Skriven 2007-05-10 18:01:36 av Josh Hill (754.babylon5)
     Kommentar till en text av rec.arts.sf.tv.babylon5.moderated
Ärende: Re: Being Poor
======================
On Thu, 10 May 2007 11:09:46 GMT, Kurt Ullman <kurtullman@yahoo.com>
wrote:

>In article <e9a543123g213vukqds2gma4904i1b6jgh@4ax.com>,
> Josh Hill <usereplyto@gmail.com> wrote:
>
>> Yep, I would get rid of them. Note though that my tax rate curve would
>> be negative for the lowest incomes, i.e., I favor a negative income
>> tax, because I believe that jobs are the best path out of poverty and
>> it wouldn't have as many negative economic consequences as the minimum
>> wage, which it would supplant.

>   You and Richard Nixon. He had a plan to do just that in the 70s.=20

Yes, authored by Daniel Patrick Moynihan, as I recall, who got Nixon
on board by convincing him it would reduce crime. It's probably where
I first heard of the idea.

>> The mortgage deduction is in no sense good, BTW: it's a great example
>> of a subsidy that creates economic inefficiencies. I read not long ago
>> that economists think that housing prices would fall something like
>> 25% if it were eliminated. Of course, not even Ronald Reagan dared to
>> touch it.
>
>    And having house prices plummet like that is a good thing how?=20

For the same reason that it makes no sense to subsidize the price of
bread -- subsidies hide the true cost of goods and services, and so
encourage people to make economically inefficient choices. Eliminate
the subsidy, and some people suffer in the short term, but some gain
as well -- and the overall gains outweigh those of the losses.

(An economist once gave me a list of exceptions to that rule, cases in
which subsidies are economically efficient, but this isn't one of
them.)

>Actually this shows yet another reason to be cautious with something so,=
=20
>excuse the expression, radical. Major decisions have been made based on=20
>current tax policy and when those change major things go bad.=20
>   For example, studies by COmptroller of the Currency show that most of=
=20
>the first round of S&L failures in the 80s were related to loans that=20
>were based on certain tax benefits making the projects teanable. When=20
>these benefits were removed by a change in the tax laws, they were no=20
>longer even feasible for tax purposes, the loans began to default and=20
>the S&Ls started to collapse.=20
>   At least theoretically, you could have some of the same concerns both=
=20
>lender and lendee, especially in those with less than stellar credit or=20
>possibly home equity loans, where the latter may be in default merely=20
>because of the sudden disappearance of 25% of their equity. Quite=20
>literally going from being in good shape to negative equity simply with=20
>the stroke of the pen. As with the S&L, a sudden change in the equity of=
=20
>a home WILL have all sorts of dislocations.=20

You could minimize any economic shocks by phasing out the subsidy
gradually.

Which being said, it seems to me that a single economic shock is
better than bleeding to death forever.

>      Also, studies show that most of the wealth of the middle class is=20
>tied up in their homes. So, if this does go through and equity goes=20
>down, don't come bitching to me about the sudden extra concentration of=20
>wealth in this country. I WILL hunt you down and hurt you (g).

Well, yes and no. A house is a house, and you have to live in it. If
the value of my house went from $100,000 to $75,000 (purely made-up
figures -- I don't know what it's worth right now), I'd have lower
assets on paper, but if I wanted to move into a new house it would be
just as affordable, because its cost would have gone down by 25% too.

--=20
Josh

"Why should we hear about body bags and deaths,
and how many, what day it=92s going to happen, and=20
how many this or what do you suppose? Or, I mean,
it=92s, it=92s not relevant. So, why should I waste my=20
beautiful mind on something like that?" - Barbara Bush
--- SBBSecho 2.12-Win32
 * Origin: Time Warp of the Future BBS - Home of League 10 (1:14/400)