Today, one of Diane Rehm’s guests, David Stockman, championed the idea to remove minimum wage and progressive income tax. This in favor of an earned income tax credit to make up the difference for decreased wages and a consumption tax. These assertions went unchallenged, along with some other bogus rhetorical tricks (Mr. Stockman was “disappointed” Obama wasn’t the peace candidate he never campaigned as, or have I landed on an alternate Earth where his 2008 platform didn’t mention Afghanistan?), a tactic I’ve come to expect from NPR of late. Nevertheless, I smelled bullshit.
Never mind we already have consumption taxes, mmkay?, unless you really want to start taxing bread and milk also, at a time when the price of these things is already going up uP UP! Never mind those tend to hurt people who make less money way more than the people who make more money [you’ll notice I’m sticking with general terms, but let’s say a 10% tax on a $200 grocery bill is going to hurt someone making $10 an hour more than someone with a six-figure income just for the sake of argument]. Never mind the better way of dealing with companies using loopholes to get out of paying corporate income taxes is to, I dunno, get rid of the loopholes. Never mind all that.
Let’s look at getting rid of minimum wage and supplementing the loss with “earned income tax credit.” This in itself doesn’t make sense because…where are these people going to collect such credits if you get rid of income taxes? The whole idea of eliminating income taxes is to get rid of all that paperwork, leaving not really any recourse to collect “earned income tax credit.” And even if there, what would that give the schlub making $6/hr. [the figure proposed by Mr. Stockman], what, $300 a year, at best? I’m guessing at this, since Mr. Stockman stuck to rhetoric, but $300 is in the ballpark of what people above my pay grade, with kids, get from similar credits (and certainly what most of us got from the Bush tax cuts). This is not good compensation for the bottoming out of minimum wage, let alone covering any cost of living. Reasonably, you’d have to assume people making such low wages would need much higher credits, especially as costs go up, which would mean giving thousands and thousands of dollars back to these people…EXCEPT! consumption taxes wouldn’t bring in enough money to cover such a plan, and now we’re back to square one. So, it’s unlikely the earned income tax credit under Mr. Stockman’s plan would bother with that.
Now, I’m of modest means, certainly not capable of understanding all the ins and outs of tax law, but it seems to me there’s a rather huge, gaping hole in Mr. Stockman’s logic. At least, until you realize Mr. Stockman is (and I quote from Rehm’s website) a “former Republican Congressman from Michigan and budget director during the Reagan administration.” Notably, they left out the results of such work (or his involvement with Collins & Aikman). Of course, on face value, any advice on how to balance the budget coming from one of the men who helped contribute to the hole that became is going to be suspect to begin with.
Now, I’m not saying Mr. Stockman is inept at his job (he’s likely very good at making money for himself and those in his club), but it’s unlikely he formulated this plan with any real intention of “balancing the budget,” let alone with much thought to the people who wash dishes, scrub floors, and bag groceries.
In fact, none of these budget talks over the last five years have been with much thought. That’s why “entitlement” spending (what we Americans call food and medicine money) are always on the perpetual chopping block as being “waste,” while billions of dollars every year (from federal, state, and municipal governments) go to the construction and maintenance of privately-owned sports stadiums with a track record of costing cities more money than they bring in. That’s why Michigan Governor Rick Snyder is fine with taxing pensions while giving tax breaks to big business. That’s why officials in Wisconsin, Illinois, and many other states are just dandy about cutting wages and benefits for teachers, police, EMTs, office clerks, and other low-level workers. Those of us down here are just minor inconveniences.