Here’s Another Edition of George's 'Myth Busters'

Note: myth to some is gospel to others

One of the many objectives I have in writing this column is to make connections between what’s happening on the national scene and show how they relate to the local scene, i.e. you and me right here in Newtown.

Toward that end, I, along with many of you, have been following the debate in Washington regarding budget and taxation issues — two things that have direct impact on all of us.

One would think that after the drubbing I took last week for some of my views about the role of government, I would avoid further excursions into this territory and stick to writing about something more innocuous but I believe it’s perfectly appropriate and even desirable to provoke thoughtful discussion from time to time. 

By that I mean discussion that is free from personal attack, recrimination, demeaning or belittling comments that serve no purpose other than to impress the rest of us (more precisely, you) with your superior knowledge.

With this in mind, let's proceed.

There has been a great deal of news over the past couple of years regarding unemployment, underemployment and taxation.  

In my attempts to follow the national conversation, I have come to the conclusion that Newtown is not quite representative of the nation as a whole.

I think the people of Newtown are better educated, earn more and enjoy a relatively higher employment rate and consequently standard of living.

To confirm this “hunch,” I turned to two sources. The first was the city-data web site and the second was the generally more reliable Connecticut Economic Resource Center.

What I learned was that Newtown’s median household income for 2009 was $109,767 as compared to the rest of the state which was $67,034. The unemployment rate for Newtown in 2008 was 4.1-percent as compared to the  state’s 5.7-percent.

I think we can agree that while Newtown is not in the same category as say lower Fairfield County, we are generally better off than others in the state and the nation as a whole.

Obviously, unlike the man Patch reported on who , most of the rest of us pay our fair share.  By the way, did you know it’s perfectly legal to “avoid” paying income taxes but not to “evade” paying.  Some people have a little trouble seeing the distinction. 

I say “most” of the rest of us pay our fair share because it is my belief that the current tax code is heavily weighted against the overwhelming majority of us — the middle class. 

Everyone recognizes the importance of social security, Medicare, veterans benefits and national defense but not everyone seems to be willing to pay for them.

We keep hearing from Congressional Republicans, such as Speaker John Boehner and Majority Leader Eric Cantor, the tired old mantra that we must not require the wealthy to pay their fair share by raising things, such as the social security cap or closing loopholes in the income tax code, because to do so would be bad for the rest of us. 

Put another way, conservatives continue to cling to that stubborn — and utterly discredited — myth about the “trickle down” theory.

If you take only one piece of information from this column, let it be this:  The trickle down theory is a huge pile of bull!  It is perfectly logical for all of us to keep as much money as possible for ourselves by "avoiding" taxes. 

What we have to do is demand that Congress rewrite the tax code so that everyone is paying their fair share. 

Now, before you burn up your keyboard heading to the comments section, reread paragraph four.

Alex Tytler October 04, 2011 at 11:01 PM
department of education, IRS, HUD, Fanie mae, freddie mack...
sadielee October 04, 2011 at 11:57 PM
So you are saying Eric that you would eliminate hud,fannie,freddie, IRS etc? what exactly would you do with the Dept of Ed?
Alex Tytler October 05, 2011 at 04:27 AM
Close it. Education is not a federal function, it is local.
Dee Dee October 05, 2011 at 10:47 AM
Eric Steinkraus for president!
newtowngrandma October 05, 2011 at 01:09 PM
Dee Dee It is people like you who have only have the information about taxes that are very dangerous. The tax code is not as simple as you are implying. The rich do pay taxes. It is the people below certain income levels( on welfare, unemployment, etc) that take from society and give nothing back in taxes. The tax code needs to be rewritten and made simpler but a flat tax would never work
sadielee October 05, 2011 at 01:33 PM
what would be considered a "non-essential"
Dee Dee October 05, 2011 at 01:53 PM
Non Essentials - look to sales taxes - many states including CT have this and exclude various items such as food (some states still tax prepared food items, while others don't tax any food), clothing on given days of the year, shelter, medical, - this question has been addressed at the state level already. As for being dangerous because I only have information about certain taxes - no I am not dangerous, rather I am one who prefers not name call but rather to propose solutions. A straight flat tax is not what I proposed - I believe a combination of a flat tax (because I believe that everyone should contribute some thing), a consumption tax (so that those who live high on the hog pay more), and a corporate flat tax (to eliminate politicians trading tax loopholes for campaign contributions). I do believe that to tinker with the current system is NOT what we need - we need a NEW system (see Herman Cain's 9-9-9 proposal its a good inteligent well thought out start). I also believe that the rich, in many cases, pay more than their fair share. But likewise there some rich people that don't pay squat. There are also way too many not paying anything and living off the system. Why should homeowners be favored over renters? Why should some corporations get tax breaks while others don't - the government should not be picking winners and losers - this opens the door for corruption!
sadielee October 05, 2011 at 06:35 PM
Dee Dee- here is what you proposed "Combine this with a flat tax on income and corporations with no loop holes and you get everyone paying a fairer share". Looks like you proposed a straight flat tax to me. Why are homeowners favored over renters- just a wild guess but I would say because on average the homeowner in newtown has about 8-10k in additional real estate taxes then a renter does (they have zero).
Alex Tytler October 05, 2011 at 06:49 PM
Because homeowners get to deduct the mortgage interest on their homes, but renters don't get to deduct the rent. Renters pay their landlords, who pay property tax, so who is really paying it? It's like taxing local business, guess who pays it? You do.
Dee Dee October 06, 2011 at 12:01 PM
Example: Two households both making 100,000 per year - both pay the 9% flat income tax or $9K each. One house hold then spends 50,000 on fancy home theater system and an inground pool while the other puts the 50,000 into a savings account for a rainy day (retirement, college, unexpected medical bills, loss of job...). The first family will pay sales tax of 9% on the 50,000 they spent or an additional $4,500 in taxes whereas the second family did not spend but saved and pays no additional taxes. One pays a total tax of $9,000 the other of $13,500 - this is not a flat tax.
Dee Dee October 06, 2011 at 12:07 PM
Eric, I am a homeowner and do get the deduction but I also get that ultimately all taxes are passed on to the consumer eventually. I just was trying to make the point that the current tax code allows government officials to pick winners and losers. In the case of the mortgage deduction I am a winner but I still think it is wrong. The decision to buy a home should be made by individuals and familes based on if it makes sense financially to do so without the government encouraging or discouraging it. There are thousands of decisions the government is encouraging or discouraging via the tax code that are not neccessarily the best decisions! The tax system as it is encourages politicians to trade passage of exceptions and give backs and credits and..... to win votes or campaign contributions - this needs to be taken out of the equation.
sadielee October 06, 2011 at 04:57 PM
not a bad idea dee dee. There is a luxury tax now in CT on certain thinigs, for example country club dues are taxed at 10%
Alex Tytler October 06, 2011 at 05:53 PM
Country club = bad, food stamps = good. Guess what kind of people are leaving CT and which kind are coming here. It's not going to be pretty in the end.
Dee Dee October 06, 2011 at 06:21 PM
Personally I don't believe in food stamps - I think food pantries and soup kitchens (which I have spent time working at) provide a better method of helping those in need. Furthermore, I believe if you give a person a fish you feed them once but if you teach them to fish they might just feed themselves, their family and a whole community for years! Same goes for welfare - a waste - don't give someone something for free so they stand around waiting for the next handout instead provide a means to self sufficiency and dignity. Lastly, I don't envy those better off than I, rather I want only to be able to make my own choices, defer short term satisfaction for long term gain and then be able to keep the gain I worked years to obtain. Equal opportunity not equal outcome is more my idealogy. I think when you provide safety nets you often cause unintended consequences, one of which is to create and every increasing number of those who will choose to rely on the safety net rather than on them selves. Safety nets should be provided by charities which are much more effecient and less prone to fraud than government entities.
Christine Sekelsky Hermes October 10, 2011 at 09:23 PM
Dee Dee, I guess you've never had the need for food stamps. Not all people who receive such help, keep it forever. I am absolutely not ashamed to say that I needed them when I was a young mother out on my own. I, however, did not keep getting them when I didn't need them. The sooner I could get self supporting the happier I was. Not all people receiving such things as Food Stamps don't need them. While I may agree with parts of your statement...I think you need to step back and look at the fact that there are people who don't want to get handouts and just need to be able to get going. In my case, my child's father was a drug addict and not working... I have no family around and that was how I was able to feed my child!
Sam Mihailoff October 10, 2011 at 09:47 PM
Dee Dee, you did it the correct way. Unfortunately, as with all entitlements there is abuse as evidenced witth the long lines of people with open hands after Hurricane Irene. Does anyone really think each had $500+ of perishable foodstuffs?
Sam Mihailoff October 10, 2011 at 09:53 PM
sorry, meant to address this to Christine...my message is the same regardless
Christine Sekelsky Hermes October 11, 2011 at 09:55 AM
Sam, I understand what you are saying, I was just pointing out that a person should not be so ignorant to not see the other side. Thanks
Christine Sekelsky Hermes October 11, 2011 at 10:05 AM
Dee Dee, My family has a property in another town that we receive rent from, we also pay taxes on it and the one here. I don't think that the Government picks "winners and losers." I actually never even considered it. I am not sure that the Government encourages or discourages a family from purchasing a house, I believe it is the drive of that family. If we didn't have that rental income, we wouldn't be paying taxes here. I think that your comment, again, does not take into account the people it doesn't apply to. I moved here because "IT'S NICER IN NEWTOWN" I think I should have moved to Westport, instead. If I were to play the blame game, I would be angry with the state of the economy, not about paying a luxury tax. We are all in the same boat, unless of course you are Warren Buffet.
Dee Dee October 11, 2011 at 10:18 AM
My point was NOT that we should not take care of those who have fallen on tough times - the point was that food stamps are NOT the most effecient way to do it. They cost money to create and administer and are prone to fraud. Food banks and soup kitchens are more effective - neighbor helping neighbor!
Dee Dee October 11, 2011 at 10:24 AM
Christine, you are not looking at it from others point of view when you speak of the property taxes. You are fortunate to now own rental properties on top of the primary residence you refer to. There are many not so fortunate and they pay taxes but don't get the write off for property taxes that you/your family does. Why should your family get to pay less in taxes because you were able to come back from being a single mom on food stamps to becoming a landlord! Meanwhile the guy who is still renting and thus does not get the deduction pays more in taxes! The point was that any tax write off/loop hole benefits one group over another and thus one group is being favored! I too get the write off but I see it as unfair to others who do not. I am looking at it from the OTHER SIDE - not MY SIDE.
Dee Dee October 11, 2011 at 10:35 AM
Christine - please refrain from name calling - "ignorant" If you notice I have stuck to stating opinions and backing them up. I did not call you names. It seems to me that you see food stamps as good because YOU got them. You see the property tax write off as good because YOU get it. I see food stamps as less effecient because I gave of my time and money to work feeding those with less and saw that other methods were providing more food, better nutrition and all for less money. I also benefit from the property tax write off but took the position that it is unfair - for while I benefit, others don't - so I took the OTHER SIDE. So I respectfully request that you retract your comment that I am ignorant.
Alex Tytler October 11, 2011 at 10:57 AM
Food stamps are like debit cards now, way too easy. Having a child with a drug addict is a bad choice. Handing you a debit card for having a child with a drug addict is the exact opposite of what ought to happen.
Dee Dee October 11, 2011 at 11:17 AM
Eric - I was thinking the same thing! There is a complete breakdown of personal responsibility in this country. I teach my daughters to be pro-choice - they have a choice NOT to have sex and therefore NOT to get pregnant. If they have sex and get pregnant then they take responsibility! Same goes for the housing mess - everyone who took out a loan made a choice - if they chose to buy a bigger house and now cannot afford it then they should take responsibility and hand it back to the bank and move on. Why should I pay to bail them or anyone out. I have made many mistakes, but I have learned from them because I took responsibility, paid the price and moved on. We are teaching Americans and our children that if they make a mistake - mom and dad will clean up the mess, or the government will bail them out. Charity works better - you have to go look the person in the face and personally ask for help vs filling out a form and taking from the government. During the last presidential election my neighbors were all in favor of Mr. Obama's redistribution of the wealth so I took my checkbook down to the bus stop and asked each of them how much of our family's income they wanted - they were speechless! I got my point across - they all want what is someone else's and don't even have the courage to ask for it face to face! I also teach my kids, life is not fair, get over it! Take the cards you are dealt and focus on making the most of it instead of focusing on what others have!
sadielee October 11, 2011 at 12:03 PM
As we all know housing is a driver of economic activity, both good and bad as we are learning. Whether people agree or not the tax code (according to Dee Dee above) provides people with an incentive to buy houses. Without an incentive would people do it? especially after what just happened? Maybe, maybe not. There will never be a level playing field, its not possible, somebody will always pay more and somebody less. Ask any CEO how they drive the bevior they desire from there sales force and they will tell you one thing- compensation
sadielee October 11, 2011 at 12:03 PM
P.S- you teach your kids that life is not fair Dee Dee- yet every agrument you make is about fairness!!! seems like a total contradiction to me.
Dee Dee October 11, 2011 at 12:58 PM
You support my point - people should or should not buy homes based on their own personal circumstances - NOT on a government provided incentive. These can have unintended consequences - such as people buying homes that they would not and could not have otherwise bought - what happens - FORECLOSURES! This whole mess would have been avoided had the government never gotten involved in home ownership - FNMA, Freddie Mac, Mortgage Deductions, ...... Remember I am arguing to have a benefit taken away that I personally benefit from. Yes life is not fair - we each are dealt different cards - but we certainly don't need the government picking who wins and loses - I prefer to leave that up to a higher being.
Alex Tytler October 11, 2011 at 02:18 PM
Government shouldn't try to pick winners and losers, because it distorts everything and leads to major dislocations like the one we just had in the real estate market. Lots of little people got squashed in the crash, and the crash would never have happened if government hadn't pumped the real estate market with all of its incentives.
sadielee October 11, 2011 at 02:40 PM
I agree. I don't want Gov't picking winners and loosers either. What incentives Eric did the gov't pump into the real estate market?
Alex Tytler December 20, 2011 at 06:03 PM
They provided ultra easy credit through Fannie and Freddie to people who were completely unbankable.


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