Author Archives: jgoldstein

Well since we’re reading this book, I came across an article on the Economix section of the NY Times site: http://economix.blogs.nytimes.com/2008/10/30/do-americans-still-hate-welfare/?scp=1&sq=WELFARE&st=cse

 According to the article it seems that Americans don’t really HATE welfare, they just don’t see it as a problem or serious issue:

“…a recent Gallup poll showed that Americans ranked welfare far down the list of the nation’s problems, below, among other things, terrorism, health care and Social Security…”

I find it ironic that people dont care about welfare but are desperately holding on to their S.S> benefits (although some argue that social security isn’t a form of welfare).  I remember one class where we were talking about the stigma that the word “welfare” comes with. One poll resulted in 65% of people believing that government spends too little on assistance for the poor. But then when asked the same question with the word “welfare” in the mix, the results were overwhelmingly lower. I think this is something very important that we, as Americans, need to look at and reevaluate. The election is in spitting distance and the lingering argument of “Obama’s tax plan=welfare for Americans” is getting old now, but its interesting to see the power of a tiny little word, welfare.

Ran across this link on YouTube and obviously it correlates to our ongoing discussion in class. Listen in to what Hannity says, specifically the part where he states “there are even people under the Obama tax plan that don’t work or pay taxes that will get money back”. Hannity makes it seem, as most conservatives do, that not only is it “easy” to receive the welfare check (we all know there are strings attached), but that these people are living high on the hog. Not paying taxes? Not working? Getting money from the government so they can live?? Preposterous! I feel like the people out of touch with the realities of welfare make themselves out to be these welfare geniuses (Like Hannity). If every other industrial nation in the world sees the value of welfare, why is the most powerful country in the world penny pinching and scrutinizing people who don’t have the means to subsist?

[kml_flashembed movie="http://www.youtube.com/v/KADr2KG5aso" width="425" height="350" wmode="transparent" /]

?scp=1&sq=welfare&st=cse

So this is a recent article on NYTimes in which both McCain and Obama criticize the other’s tax policies, while making references to welfare. Basically McCain has been calling Obama’s Tax proposal a “welfare giveaway to working class voters”. He even accuses Obama of wanting to turn the IRS “into a giant welfare agency, redistributing massive amounts of wealth at the direction of politicians in Washington”. Obama responded to this by claiming that McCain is completely out of touch with the middle class and attacks his plan to give $200 billion in tax cuts to wealthy corporations. He also claims that McCain might be “the first politician in history to call a tax cut for the working people, welfare”

When it comes to the economy im with Obama. I just hate this trickle down economy that McCain supports where he thinks that if we give more money to big wealthy corporations it will all trickle down to everyone else. I also find it interesting that both candidates use “welfare” as a way to describe the tax breaks that certain individuals would get under the other’s tax policy. I dont know, what do you guys think?

I recently heard an amazing observation about this presidential race that I wanted to share. I know our nation has deeply rooted racial biases that most of the time, are hidden from plain sight. The notion that there is a political science term called the “Bradley Effect”, which essentially says that for a black man/woman to win a politcal election, he must have a lead in the polls that is at least 5% or better is very alarming. The rationale is that in the actual voting booths, white people will not be able to allow themselves to vote for someone who is not white because of their deeply rooted racial biases. The observation I heard was that if Obama gets elected, obviously he will be the first black president, but he will also be the first president to the newest generation of people age 8-12. That age (sometimes earlier) is typically where you start realizing what your country is, how your country works, and more importantly who is in charge of your country. I know for me having Bill Clinton as that first president I actually remember had a profound effect on me. He was hip, played the saxophone, articulate and was young and brash. Him being the president was something I was “proud” of. Imagine if that new generation saw a black man as president. Seeing an african-american in the oval office wouldn’t be “weird”, it would be normal. I feel like it would shatter many of the deeply rooted racial biases inherent in politics today, and society altogether. Maybe not for earlier generations, but for later generations to come. I’d love to hear your comments on this, if you agree/disagree etc.

As promised….. Erik.

Now to be fair – he didn’t actually dress like this. We ended up at Jurgen’s family compound one night because it was too late to go back to town (Storuman) and when we got there it was FREEZING so we all found whatever clothes we could to put on to sleep in. Erik found a fur coat….

For those of you who haven’t seen this video, look at it when you have sometime. Its a nice comparison between the welfare systems of America and some countries in Europe. Its sad to see how crappy our health care system is, compared to Britain, Canada and France.

http://www.megavideo.com/?v=6GLO6VSV

I tried to collect some info on IRS audits…  I couldnt find a published number, but I did my own rough estimate based on IRS numbers, and it looks like an EITC return is about 8-9 times more likely to be audited  – at least in 2002.  (.26% vs 1.86%)  Here is other info

Apparently the audit rate for big companies has gone from 70% down to 26% – read about it here.

This article shows how low the audit rate is, and also mentions the special effort to audit EITC recipients.

This article gives an overview of different audit rates – apparently income returns over 1million do get a slightly higher rate of audits – though not as high as EITC returns. Some of this gets complicated – because high income returns are not always very clear cut – but the income is often concealed within other taxable ‘entities’ that can be created – and there are different audit rates for each. I know that one ‘entity’ that wealthy people often use is the S-Corp – and you can notice that its audit rate is significantly lower than the rate for individual high income returns.

Now the IRS tells the story slightly differently – they focus on the % increase in total audits for certain categories, as opposed to the changes in the relative % of audits in each category. In their published documents, they don’t talk about the different success rates for audits at different income levels, and they dont mention low income audits at all. They do show however, a huge drop in audit rates between 1999 and 2000…. so between clinton and bush. They show a rise in high income audit rates, and a drop in the audit rates for businesses. including entities like partnerships and s-corps.

If you fish around in some of the data on this page, it shows that people with their own Self employed businesses are twice as likely to be audited if the business reports less than 25k of earnings.

Still not much directly said about EITC audits… but there is a report from the tax policy center that addresses the issues we talked about in class. This is from the report:

IV. The EITC Compliance Program

Amid all this enlightened activity by the IRS, one example stands out as a misallocation of resources and a failure to balance the rights of taxpayers against the need for enforcement—the EITC compliance initiative. EITC noncompliance appears to be a problem. The IRS estimates that somewhere between 27 and 31 percent of earned income tax credits were issued erroneously in 1999, either because of taxpayer confusion or fraud. They estimate the EITC compliance gap at $7.8 billion in 1998 (See Figure 1), about 0.5 percent of revenues and about 2.8 percent of the total tax gap. But EITC enforcement accounts for 3.8 percent of total enforcement budget in 2003. Indeed, the IRS has requested a 68.5 percent increase in its EITC enforcement budget, while increasing other enforcement by only 3.3 percent. In fact, the increase in EITC enforcement would account for 45 percent of all new compliance dollars. (Internal Revenue Service 2003) On its face, this seems like an inefficient way to spend scarce compliance resources.

The apparently high rates of noncompliance are troubling, but it is necessary to put them in context. Indeed, it is likely that much EITC noncompliance reflects compliance problems that are endemic to the entire income tax. If that is true, then targeting compliance activity at EITC participants alone may not be the most effective use of IRS resources.

The IRS’s current compliance initiative, which will for the first time since 1988 collect information about other than low-income taxpayers, may help resolve some of these issues.

# # # # # # #

The report seems to claim that: The IRS is not as well funded as it once was. It is trying to audit many higher income returns and doing some good things with its limited resources. However, it is also devoting excessive resources (relative to its cost benefit analysis) to EITC returns – as part of a ‘special initiative’ to target EITC cheats – when most data shows that this ‘cheating’ is no more, and perhaps even less, than similar ‘cheating’ in other tax brackets.

So anyway – I’m glad we had this discussion – i’m learning a lot about the IRS that i didnt totally know about myself….

I couldn’t find anything really brief on this so I will write it out, hopefully shorter:

Ketchup says, “For one thing, the emergency nature of the crisis, the lack of prior long-term planning, and the early New Deal’s flexibility meant that nothing new was really in place until the late 1930’s.”  Eh, I don’t think so.

Before the New Deal, the federal government was much more limited in scope and did not make any laws it didn’t have to – states were much more independent, and the prevailing philosophy was that the federal government should have very limited powers.

As a result, the Supreme Court repeatedly struck down New Deal laws saying that the federal government was overreaching its authority.  The Social Security Act was in the process of being challenged.  The laws the Supreme Court were striking down were good for people.

The basic idea was that by 1936 people were pissed and re-elected Roosevelt in a landslide, and in February 1937 he proposed the above plan, known as the “Court-Packing Plan”.  He proposed a law whereby he could appoint one additional Supreme Court justice for every Supreme Court Justice sitting on the court that was over the age of 70.  At that point, the average age of a Supreme Court Justice was 71.

This was a good plan because then he could appoint SIX Supreme Court Justices and get them to stop screwing with his New Deal Laws.  People from all walks of political life were up in arms.

This situation was a Constitutional Crisis of enormous proportions.  So they say.

The Supreme Court stopped being such a hardass and stopped rolling over his laws.

However, because he was such a jerk about the whole thing, he is considered to have been less effective because of the enemies he made during that time, and many of his future plans were thwarted by Congress, by both Dems and Reps.

Because of all that craziness, it is widely considered that the New Deal really didn’t do much for the Depression, but that our entering WWII did.  Most of the reason that the New Deal didn’t do much for the Depression was that after 1937 – and many previously enacted laws were struck down – he couldn’t get much done in Congress, and Congress, mostly conservatives, blocked him on loads of stuff.  It seems that he only got re-elected in 1940 because of the war.

And that, my friends, concludes today’s Constitutional Crisis.

For more info:

Social Security Online

Answers.com – not a bad short summary

Wikipedia – read judiciously, pun intended!

When they said that Roosevelt established the NRA, I was like WT_?  Here’s the word:

The other part of the National Industrial Recovery Act (NIRA) was the National Recovery Administration (NRA), whose task was to establish and administer industrywide codes that prohibited unfair trade practices, set minimum wages and maximum hours, guaranteed workers the right to bargain collectively, and imposed controls on prices and production.