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SHAME-ONOMICS.
As Matthew Yglesias notes, George Stephanopoulos did a decent job challenging McCain on his gas tax holiday proposal over the weekend. It won't work, Stephanpoulos pointed out. Economist say it's a stupid idea. It's simply a subsidy for oil companies, and it'll go directly into their profit. McCain's reply?
there’s no economist in the country that knows very well the low-income American who drives the furthest, in the oldest automobile, that sometimes can’t even afford to go to work...We would make them shamed [the oil companies] into it. We, of course, know how to — American public opinion. And we would penalize them, if necessary. But they wouldn’t. They would pass [the savings] on.So McCain's argument here is that the poor in this country need serious help, and so we're going to subsidize oil companies and try to leverage public opinion to shame them to pass some of those subsidies back to consumers in the form of price cuts at the pump. To call this a bank shot insults bank shots everywhere. If John McCain think that low-income Americans need more money in their pocket, there's an extremely straightforward channel for him to achieve that goal: The American tax code. There, McCain can simply pursue his priorities and address distributional concerns at will. He need not pay off a middleman then try and use the bully pulpit to get the middle man to offer price cuts to the poor (and also the rich, and also the upper middle class). But McCain doesn't believe the poor need more money in their pocket. And I know this because I've looked at his tax plan, which breaks down, according to the Tax Policy Center, like this:
This not only put the lie to McCain's faux-populism, but also his gas tax holiday idea. After all, we're in a moment of severe economic stress, during an age of rocketing inequality, when the tax rates on the rich aren't keeping pace with the growth in their incomes. And none of that has shamed McCain into proposing policies that ease the burdens of the poor rather than increase the square footage of the yachts favored by the rich. Why should oil companies -- which don't need to be elected, and are fully accustomed to being hated -- prove any more sensitive to public opinion?
COMMENTS (8)
At what income level does the top quintile start right now? It would be useful to say "If the plans were to start today, people earning $X or less would benefit from Obama's plan. People earning more than $X would benefit from McCain's plan."
Posted by: Tim at Mooselessness | July 28, 2008 12:02 PM
Of course it's a stupid idea. It's all politics.
Where was the criticism when it was pointed out to you that Obama supported ethanol production from food sources?
Oh, tha's right. You defended his ignorant and destructive position by saying "It's just politics".
So why get your knickers in a wad over this? This seems small potato. Could it be that you, too, are playing politics?
Posted by: El Viajero | July 28, 2008 12:18 PM
Answered my own question. From the Tax Policy Center document Ezra linked, page 26, footnote 2:
(2) The cash income percentile classes used in this table are based on the income distribution for the entire population and
contain an equal number of people, not tax units. The breaks are (in 2008 dollars):
20% $18,981
40% $37,595
60% $66,354
80% $111,645
90% $160,972
95% $226,918
99% $603,402
99.9% $2,871,682.
Posted by: Anonymous | July 28, 2008 12:43 PM
^ That was me from comment 1, sorry.
Posted by: Tim at Mooselessness | July 28, 2008 12:45 PM
According to the IRS since the Bush tax cuts;
top 1% earn 22% of the income and pay 40% of the income taxes he highest share in the past 40 years.
THe top 10% paid 71% of all income taxes.
Americans with incomes below the median paid a record low 2.9% of all income taxes.
Is it now progressive policy that those in the lower half of the income scale pay nothing in taxes? Should the top half give a total free ride to the lower half?
Taxes paid by millionaires doubled between 2003 and 2006 from 136 billion to 274 billion.
This puts to lie your claims that rich made out with these tax cuts disporportionatly.
Obama and you apparently advocate paying people just to be American's or living in this country. I would love to see a poll on how many people support your no taxes for the bottom half plan.
Posted by: Nate | July 28, 2008 2:59 PM
Nate,
Most people are not aware of the distribution of the tax burden. The comeback is "well, they make most the money" and they do, but they pay more now....much more.
Bottom line is the tax system is already heavily progressive. However, when people want your money, they will redefine terms and nuance everything to make their actions appear reasonable when they aren't.
Posted by: El Viajero | July 28, 2008 5:21 PM
Why not just go straight to the shaming? The oil companies already have a bunch of profits, so ditch the whole tax holiday thing and start shaming the prices down.
Posted by: Brad | July 29, 2008 3:20 AM
Haven't gas prices actually FALLEN in the last two weeks?
So how do these great economistsa ccount for that? Why I thought the big mean oil companies controlled prices and they would just keep the price at 4.10 a gallon and pocket the difference.
What say these great economists about how in the world oil companies let this price reduction slip by without them stopping it??
By the way, at least Obama is two faced enough to have his DNC convention committe avoid the tax by using city pumps...you just had to know when Obama opposed lowering the tax on poor people, he had some con in his pocket to have his own people not have to pay it.
Obama called this a gimmick, funny how when it comes to his DNC and his convention, he wasn't above stooping to McCains gimmick.
Posted by: Anonymous | July 29, 2008 6:51 AM