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New Tax on the Middle Class... but one you'll LIKE!

Discussion in 'Political Discussion' started by PatsFanInVa, Nov 30, 2010.

  1. PatsFanInVa

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    Using the right wing's logic, the President has just announced a tax hike of a few hundred dollars to a couple of grand on American middle class income. That's right, he has frozen civilian Federal pay for two years (I believe it's pending congressional approval/elaboration.)

    Now then: since this affects the middle class almost exclusively, I'd think it's fair to allow the gigantic tax giveaway to the rich expire.

    Oh, you say $200K/year isn't rich for an individual, or $250K/yr for a married couple?

    Well, it's definitely past the top of the GS scale, and we hit those guys, right?

    During this time when so many are unemployed, and so many have their pay frozen or cut, the gubmit workers certainly aren't hit the hardest. Lots of people here know I fit in the gubmit category. If it's part of real austerity, I have no problem with the freeze (though it's anti-stimulative, of course, in the middle of a pretty iffy recovery.)

    However, I think it's a good idea to follow up on this drop in the bucket with a sunset to the Bush tax giveaways to the rich immediately.

    Oh, by the way - many on the left and the unions are downright angry about the freeze.

    To me, it looks like a standard "compromise your own side first" move, that seems to be an Obama trademark when dealing with his political opposition.

    Like I said, I'm glad to take the hit, so long as he gets sound fiscal policy out of it on the back end. I'm not rich, and my situation isn't ideal. But I'm all about sacrifice if we're all prepared to do it for the good of the country.

    Just pinging the feds? Well, that would be incredibly annoying, if he doesn't get something back out of it, like sunsetting the tax giveaways to the rich.

    PFnV
  2. DarrylS

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    Having been involved and now an active follower of how efforts are made to reduce budget deficits in Municipal/State and now federal government, wage freezes are a popular effort.

    My view is that it is harmful as most of these work forces are made up of lower level clerks who do not make a lot anyways... for an employee making 150K per year this means not a whole lot, for an employee making 30K per year is it meaningful. Have always advocated for leaving the lower salaried workers (primarily women) out of this equation.

    Conversely it is the same with raises, a 2% raise for an employeed making 30K per year is 600 per year.. a 2% raise for someone making 150K per year is 3,000 per year, there is not a lot of equity in this effort. There are better ways of doing this and making it more equitable.

    Early on we used to negotiate raises that would be something like 3% or $15.00 per/week whatever was greater.. that was more equitable for clerks, janitors and other lower salaried positions who usually make up the majority of municipal/state/federal systems..
    Last edited: Nov 30, 2010
  3. IcyPatriot

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    #87 Jersey

    It is symbolic if nothing else ... it freezes pay but they can recoup it in a bonus or a higher pay grade.
    Last edited: Nov 30, 2010
  4. PatriotsReign

    PatriotsReign On the Roster

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    Being in the private sector, if I get a raise, it's good for the gov't. They get to collect more taxes from me!;)

    BTW...I'm fine with letting the tax breaks on the wealthy expire.
  5. reflexblue

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    #91 Jersey

    Hell my wages have been frozen for at least two years.
  6. Real World

    Real World Moderator Staff Member

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    How is this a tax hike on the middle class again?


    Um, freezing federal pay for 2 years is nice, but when you see that fed employees make a lot more than similar jobs for those in the private sector, I'd say a cut was more in order. Also, the fed should be eliminating positions altogether. The point isn't to freeze the beast, it's to slim it down. The government needs to downsize, not keep the status quo in place.
  7. PatsFanInVa

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    Like millions of other federal workers, I am in the middle class.

    I would have more money next year, but now I won't, because the gubmit said I can't have it.

    That meets the rightie definition of a tax hike.

    You know - like letting a temporary tax cut expire, or complaining that you're "taxed" if insurance companies are inconvenienced by regulation, because despite enormous profit margins, they will choose to pass any such inconvenience down to a consumer (despite the obvious counterargument that if they have enormous profit margins, the capitalist ethos, in the absence of collusive pricing, would militate toward competitive advantage to the corporation that doesn't pass that inconvenience to the consumer.)

    I have seen both these arguments made on this board. I conclude, therefore, that the Federal pay freeze is a tax hike on the middle class. I don't see what else you'd call it.

    PFnV
  8. PatriotsReign

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    I can understand your argument to a point. What I don't agree with you on is that gov't workers be included in discussions of "middle class". When we talk about the various classes, I think most think of private sector workers. Gov't workers are kind of in their own class.

    Federal gov't employees are the only group that works for the rest of us and is accountable to the rest of us. But the private sector is not accountable to other citizens because their tax dollars aren't supporting them.

    In my company, we get a performance raise. We never get a cost of living raise. If our company isn't performing, no one gets a raise. How does one evaulate if gov't agencies are successful?
  9. Real World

    Real World Moderator Staff Member

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    That's pretty dumb, since no money is coming out of your pocket.

    BTW, a pay freeze is called reality. Welcome to the Real World pal. I haven't had a raise in years. When times are lean, you make sacrafices. That's what most of us in the Real World do. Of course those people working in the gubmit want their damn raise, to go along with their sweet benefits. Whats sad in all this, is that a pay freeze is perfume. The real need is for cuts. Downsized labor force, and a slash in federal pay for higher earners.
  10. Stokes

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    I see where you're going PF, but you can't call a pay freeze a tax hike! The government is not increasing the amount of taxes you are paying, they're simply not giving out raises for 2 years. Those are very different things. Letting the tax cuts expire will increase the amount of money the gov't is taking from paychecks, thus, even though it was originally implemented as a temporary measure (because it was passed using reconciliation), it still amounts to a tax increase. What else would you call it?

    Perhaps we should go with the words of President Lisa Simpson and call it a "temporary refund adjustment."
  11. Wolfpack

    Wolfpack Banned

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    Since when did federal government employees represent the whole of "middle class"? :confused:
  12. Real World

    Real World Moderator Staff Member

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    In the words of Pedro Martinez, but not while sitting under a mango tree, "where you been man?".
  13. IcyPatriot

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    #87 Jersey

    You're going to have to shorten your posts a bit ... you know as a belt tightening move. ;)
    Last edited: Dec 1, 2010
  14. Stokes

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    Crazy busy at work (a good thing!) and desperately trying to keep my team out of last place in the predict the score contest.

    If I don't get a raise this year should I claim my taxes went up?

    BTW here are some links about public vs. private pay:

    Federal pay ahead of private industry - USATODAY.com
    "Overall, federal workers earned an average salary of $67,691 in 2008 for occupations that exist both in government and the private sector, according to Bureau of Labor Statistics data. The average pay for the same mix of jobs in the private sector was $60,046 in 2008, the most recent data available."

    "These salary figures do not include the value of health, pension and other benefits, which averaged $40,785 per federal employee in 2008 vs. $9,882 per private worker"

    I found this second article to lay out the claims on both sides pretty well, including variables such as experience, productivity, and job security:

    Reason Foundation - Comparing Private Sector and Government Worker Salaries

    Please note I am not familiar with reason.org (or reason in its real world incarnation either some would say) but yes I'm sure its a biased, awful site that should be ignored. I just liked that it brought up arguments not found in other articles that oversimplify the comparisons.
  15. PatsFanInVa

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    I'd be interested to hear about how they compare position against position, since no private sector jobs -- and all safely federal jobs -- are inherently governmental work. If a position is not inherently governmental, you compete it against the local services market, and if the fed is more expensive, you eliminate the position.

    The gubmit does not have fry cooks and janitors, gentlemen, not in great numbers. Those jobs are typically contracted out. With a 4-year degree, a government worker fresh out of college starts at a GS-5, except in cases of superior academic achievement - they start at a GS-7.

    In Washington, DC, including locality pay, that's $34K-$42K per year. Now - examine that against fry-cooks and janitors, and it may look high. Examine it against desirable destinations for college grads and it looks low. The top GS pay - GS15, step 10 - in DC is $155,500. Boston goes by about the same numbers. I would love to see the high-performing, best-of-breed private-sector employee of a law-firm, advertising agency, or bank, who is making $155,500 by end of career (hint: the "steps" in a grade come every year for the first 4, then every other year for the next few, then every three years, etc. - you pretty much have to be at end of career to be a GS15 S10.) The Senior Executive Service - the highest-paid federal employees - range up to about $180K, and are eligible for a bonus of up to $25 K. How does that compare with corporate executive compensation? Oh that's right - it fits neatly into a fraction of the corporate exec's bonus.

    Precisely because government work is not a good deal in the eyes of the optimistic early-career worker, the gubmit workforce skews older - exaccerbating the glitches in such comparisons.

    In any event, the GAO and Congress consistently find one answer, that federal compensation does not exceed the private sector's, and rightist drink tanks find another answer, the opposite (of course.)

    To the main point of the post:

    I am, in fact, in the middle class, as are the other couple million government workers affected by this tax. We are all going to have less money than we were going to, and the gubmit is taking it from us.

    This is the bar I have seen used by the local righties about how everything is a "tax" and "you have to count all forms of taxation."

    The move is anti-stimulative, as is obvious; middle class people spend what they get, whereas rich people save or invest it. Our problem in this country is not a lack of investment capital; there are trillions of bucks on the sidelines as we speak, but nobody wants to invest in goods and services for which demand is so low, because so many people are broke and in debt.

    The problem is a problem of demand.

    But many such anti-stimulative moves seem to be abroad in the land, not least of which is the proposed extension of tax giveaways to the rich. They will not result in more business capitalization. But via squeezes elsewhere, they will result in lower demand, and therefore more business closings -- more job loss.

    And of course, we pit one group of middle-class workers against another, and rail at federal employees.

    Again, I saw this one coming a mile away, and have no problem with it, so long as it is followed by serious debt reduction moves, like ending the tax giveaways to the rich.

    Really? You're going to shut down all action in congress unless you get the tax cuts of the richest extended?

    Really? Including the extension of unemployment benefits -- a comparative drop in the bucket?

    So the monopoly guy can buy another spare monacle?

    Really?

    I like to be an optimist. I like the notion that we can accept the big-ticket cuts that piss off all sides equally.

    But from what I've just seen, our Pres followed a standard pattern:

    - Give the other side something they want
    - Hope they'll give you something you want
    - Look baffled when they react by some hard-line stunt.

    Glad to have done my part. Hope it "buys" the administration something in terms of addressing the real problem. Somehow doubt it.

    PFnV
  16. Real World

    Real World Moderator Staff Member

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    12345678910
  17. Stokes

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    From the table at the bottom of the linked article:

    Cook Public = $38,400; Private = $23,279; Difference = $15,121

    Janitor Public = $30,110; Private = $24,188; Difference = $5,922

    It could also reflect lower turnover due to more difficulty firing a public employee, or lower turnover because the public employee is already making more money/has better benefits than they could find in the private sector.

    This data is from The Bureau of Labor Statistics, a government entity, not some right wing think tank.
  18. PatsFanInVa

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    That particular list is sourced to, and I quote,

    "Private" and "Public" does not mean "Federal," I might add.

    If there are cooks and janitors in the federal system, they have by now survived an A76 audit, which establishes that they are cost-competitive with private sector alternatives for the same service.

    Also from your linked USA Today article:

    PFnV
  19. PatsFanInVa

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  20. Stokes

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    And the best part of the whole thing?

    "Both sides are armed with official government statistics, but neither side is right."

    Haha I love it.

    Here was Obama's take, and I believe he's got it right:

    "in October, Obama told a group of African-American journalists that "high-skilled workers in government are slightly underpaid. Lower-skilled workers are slightly overpaid relative to the private sector." And there is evidence to support that conclusion."

    At any rate, I think federal employees have been largely protected from the recent economic downturn, with the fed both hiring more employees and increasing their pay:

    "While many workers in the private sector have despaired of a pay increase in the past few years, Congress takes care of federal employees with annual raises, awarding 3.9 percent in 2009, 3.5 percent in 2008 and 2.7 percent in 2007."

    Federal salaries targeted as private sector pay stagnates | Washington Examiner

    PF I'm not sure what your personal experience has been the last 3 years, but I know many private sector employees have not seen pay raises over the same time frame (and do not feel compelled to share if you don't want!). Personally what little raise I have received over this timeframe has been outpaced by rising healthcare costs passed on from my employer, which I don't think happens to fed employees, but I really have no idea.

    So to sum it up I am sorry for you personally PF, you may be very deserving of a raise, but at a time when we're running historic deficits it seems a bad idea to continue increasing fed pay. I suppose its a trade-off for the increased job security a gov't job provides (please excuse crappy source, I couldn't find the nice graph I was looking at yesterday):

    Private Sector Losses vs. Public Sector Gains - By Veronique de Rugy - The Corner - National Review Online

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