To John: I agree that the economic argument isn’t clear-cut. Economists have honestly argued for trickle-down tax policies.

Another point is that both arguments have economic merit. If you hand out money to poorer workers then they have more to spend, therefore boosting the economy. However, if the richer workers are taxed less they are more likely to invest and providing national savings.

It would be nice if the economy worked in such a way that we could do what’s best for the economy and also do what’s “fair”, but the truth is that these are two separate questions and a “fair” economy that sucks is sucky for everyone.

You write: “I imagine he will do that by taking money from people who pay taxes and writing out a check to those who do not.” I think you are basically correct about Obama’s tax plan and I respect your point — but it’s a moral point, not an economic point. And the fact is that a strong economy ideally benefits everyone — rich, poor, middle-class, etc.

If you look at what’s been going on in this country over the past couple of decades, costs for the middle class have been rising across the board, whether it’s gas, food, heating oil, health care, college tuition, etc. Meanwhile, income for middle class Americans has remained stagnant, while income for the super-rich has gone up like crazy. The super-rich have been benefiting from our economy much more than the middle class — and that’s why I’m willing to accept Obama’s tax plan from a moral standpoint. As Ted Kennedy has said, “a rising tide should lift all boats.”

But setting aside the moral issues (that is, the fairness issues), doesn’t it make sense that it would help our economy to put money in the pockets of the hundreds of millions of Americans who buy consumer goods, provide American labor, etc?

The WSJ hammers Obama’s plans, while the NYT hammers McCain’s. To me, that is the biggest tragedy that has come from the advent of cable news and talk radio; it has polorized the entire country. It feels as if people are forgetting that we are all trying (hopefully) to do what is best for the country. But, instead Republicans and Democrats view eachother as enemies and disagree with eachother on every little thing. And the worst part about all of this is that I don’t see that stopping any time in the future.

Based on what I’ve read so far — I’m still researching — lots of respected economists don’t see anything horrible, any kind of historical aberration or radically new here. We already give tax credits to people for a host of reasons.

To get away from this specific plan, but to speak in principle: I’m not against social welfare states or re-distributionist policies. In a sense, all social and infrastructure spending is inherently redistributionist: if the top 1% of income-earners pay 50% of the costs of building a freeway system, that’s in a sense a transfer of wealth, but a justified transfer of wealth — the top 1% earner didn’t get his money through magic or without the help of the already existing massive social infrastructure, public education system, military expenditure, etc.

Which is to say we transfer wealth all the time. The question is — is the form of redistribution fair? Does it do what we want it to? Can we live with the particular spread of distribution. In principle the tax credit for the non-worker is not different in kind from the tax reduction of the worker. The revenue shortfall for each is paid by the top 2% of earners, unless we’re willing to live with increased deficit spending.

So if it turned out that this plan does what you have described and economists think that it’s a sound plan that’ll do what it sets out to do and work as Obama describes — I’m OK with that. Then again, I’ll benefit from the tax cuts he’s proposing so maybe I’m biased!

Do you like this plan?

“A $1,000 ‘Making Work Pay’ Tax Credit. For 95 percent of workers and their families—150 million workers overall—the “Making Work Pay” credit will provide a refundable tax cut of $500 for workers or
$1,000 for working couples. This credit will benefit over 15 million self employed workers and for 10 million low-income Americans, will completely eliminate their federal income taxes.”

If I understand this correctly, then your original claim is correct, rbates. Lots of families will receive a tax credit under the Obama plan.

Do you think this is a bad idea?