SB 8610: GAIN Act

[Sestak]

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Section 3; Advance Payment of EITC
1. Chapter 25 of subtitle C of the Internal Revenue Code of 1986 is amended by inserting after section 3506 the following new section:

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Section 4; Funding
1. The top marginal rate of income tax shall be increased to 51%, and the second highest marginal rate of income tax shall be increased to 42%.
2. An additional income tax bracket is established at $1 million in income and above, the marginal income tax rate for this bracket shall be 58%. 
Section 5; Implementation
1. All changes in this legislation shall take effect in the first taxable year following its passage into law except for any changes where a specific alternative implementation date is detailed.
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Sponsor: Pericles

[Pericles]

This bill is based on the rl Brown-Khanna GAIN Act, except this is funded(due to Paygo and also because that bill was quite expensive and this will hopefully make up the cost). This is a much-needed tax break for workers, while being done fairly and effectively so that it benefits those who most need our help and better rewards hard work. It substantially exapnds the Earned Income Tax Credit(EITC), which has proven to be one of the most effective mechanisms for boosting the incomes of low-income workers. This bill doubles the EITC for working families and rectifies the previous problem of childless workers not getting enough of the benefit from the EITC by increasing their credit sixfold. This bill is a much needed boost to millions of Atlasians and will create a fairer and more prosperous nation, so I urge the Senate to strongly support it.

[Pericles]

Given there is no further debate on this bill, I motion for a final vote.

[Lechasseur]

I object. I think income taxes are being made too high, no one should be taxed more than half their revenue, imo. Is there a way to fund this without getting to 58% tax rates?

[Mr. Reactionary]

I object. I think income taxes are being made too high, no one should be taxed more than half their revenue, imo. Is there a way to fund this without getting to 58% tax rates?

We still don't even know if this is actually funded, as Pericles hasn't presented an analysis and I haven't scored this yet, so its a mystery if this actually passes paygo right now.

[Lechasseur]

I object. I think income taxes are being made too high, no one should be taxed more than half their revenue, imo. Is there a way to fund this without getting to 58% tax rates?

We still don't even know if this is actually funded, as Pericles hasn't presented an analysis and I haven't scored this yet, so its a mystery if this actually passes paygo right now.

OK, that's another reason for me to object to a final vote.

[Sestak]

This is a rather annoying drawback with Paygo; it makes the tax code rather annoying to deal with because there are gazillions of piecemeal increases.

[Mr. Reactionary]

This is a rather annoying drawback with Paygo; it makes the tax code rather annoying to deal with because there are gazillions of piecemeal increases.

There are tons of programs that can be cut rather than just relying on tax increases.

[Lechasseur]

This is a rather annoying drawback with Paygo; it makes the tax code rather annoying to deal with because there are gazillions of piecemeal increases.

There are tons of programs that can be cut rather than just relying on tax increases.

Agreed

[MAINEiac4434]

This is a rather annoying drawback with Paygo; it makes the tax code rather annoying to deal with because there are gazillions of piecemeal increases.

There are tons of programs that can be cut rather than just relying on tax increases.

No

[Mr. Reactionary]

This is a rather annoying drawback with Paygo; it makes the tax code rather annoying to deal with because there are gazillions of piecemeal increases.

There are tons of programs that can be cut rather than just relying on tax increases.

No

Yes

[Southern Senator North Carolina Yankee]

This is a rather annoying drawback with Paygo; it makes the tax code rather annoying to deal with because there are gazillions of piecemeal increases.

The purpose of paygo is to make sure you aren't digging the hole deeper. It is just far too easy to keeping throwing money in different directions to say "you did something" and not care about the deficit. Except the budget comes due eventually and you have to face the reality that the deficit is climbing back above $1 trillion dollars.

Labor and specifically Adam made such a big deal about how it passed several balanced budgets pre-reset but the kicker is, that those were done with unrealistic and inconsistent numerical projections and very high tax rates.

[Southern Senator North Carolina Yankee]

If we are going to do this, why did we also need that massive minimum wage increase?

And frankly if you were going to raise the EITC, you should have paired much more modest minimum wage hike together with a more modest EITC increase to 1) ease the burden on the employment side of things and 2) Ease the budget impact of this bill here before us.

You also need to remember that the lowest income brackets up to lower middle class are presently getting Medicare like healthcare coverage for either nothing or next to nothing in premiums under the R&RPH of 2017.

We need to take a step back and instead of pushing all of these real life bills that are based on the real life situation we should examine just what the state of being is for several different scenarios of living standards in Atlasia and then take into account that situation as a basis for whether or not we need to pass yet another program to achieve essentially the same result as two other programs and blow up the budget and/or our tax rates to do it.

But no we aren't going to do that. WE are going to assume that everything we do is good in any and all circumstances and in any and all amounts, so we are just going to drive it to the max with everything.

That is not how this situation works and it is fun to have such a narrow track mind. But at the same time we have an obligation as well to ensure a stable and growing economy, to avoid high interest rates and to be responsible with the budget.

We just came off a war with China where we somehow managed to blockade and economically cripple the crutch upon which we have sustained our largess for the past two decades, without sustaining any of the consequences for having done so. Realistically speaking, interest rates would be 20% and we would be amputating arms and limbs right now just to cover the debt servicing costs on what we have already accumulated. I concluded years ago that the only reason we have made it this far is because of the far without being responsible in RL as well as year, is because of the continued appetite for the purchasing of our treasuries by the people who are making large amounts of money off trade surpluses with us. That would of course be many Asian countries and OPEC, but especially, China!

You guys apply the same irrationality with tax rates as do with deficits and then like the Prarie Communist of old justify it by pointing to the 1950's. Does that mean you are endorsing blowing up the rest of the world, so that nobody has a choice but to buy our stuff and exports can be high at the same time the US Dollar is? Because that was the world of the 1950's. Everything has a context and everything has a limit. We could tax people at such rates and not suffer anything for it in terms of competition, but by the 1970's, we sure got a rude awakening when Germany and Japan started to kick our ass with newer, more efficient production, which our firms couldn't afford for obvious reasons. The end result was a wave of outsourcing as firms lost out to foreign ones or later on got the idea to move their own production offshore. Many places have still not recovered from this and never will most likely.

I am not a supply sider in any and all circumstances like most people on the right. I think it had its time and place and that has now most assuredly passed. As such, when the Federalists were in power, we never passed a massive across the board tax cut like the ones that passed in real life. Even if we had a majority in the Senate, I was always opposed to it because I am a fiscal conservative, not a supply sider and there is a difference.

At the same token, just as it is irresponsible to push supply side economics in any and all circumstances irregardless of the factors on the ground, so to is it a mistake to do likewise to push either deficit funded or high taxed based redistribution in cases where such is not necessary, duplicative or otherwise not worthy of the trade-offs.

[Pericles]

I respect Yankee's point about the difference between real life and Atlasia context-wise. Yet, while there are differences there are also similarities and I think the similarities are broad enough here to make this bill a good idea, and I'm unconvinced that the context is so radically different that what I believe is a great idea irl is now a bad idea. I think that in this context the EITC expansion is a good idea and worthwhile, and I believe that boosting incomes for lower-income Atlasians is better done as a package of measures-which we seem to be in effect heading for-rather than stand-alone policies. I think the tax increases in this bill are appropriate and are placed so that they are fair and reduce the impact on the economy, as I think cuts to programs benefiting middle-class or low-income Atlasians or tax increases on those groups would be more harmful as they have a greater Marginal Propensity to Consume. If the funding situation ultimately emerges that this bill cannot be properly funded without truly entering the territory of unreasonable and economically dangerous tax increases or spending cuts, then we should look at amending the bill and the extent of the credit expansion, but if that is not the case I believe we should go ahead with this as is. I'd like to note these are changes to the marginal rate of income tax. And furthermore, personally I find that when I'm looking for how to meet the Paygo requirements my judgement is that a revenue increase taken primarily from upper-incomes is less harmful than spending cuts. I do want to see if there are cuts that can be made but they have to be good on their merits and given that there is far more talk of wasted spending in the budget than there is proof of said wasted spending existing, let alone it being addressed(especially when there was previously a lot of opportunity for this to occur), so I'm hesitant to make cuts that I am unsure about the ramifications of. I recognize that in the Senate we have a range of different worldviews and ideologies, and how I see things is different to how someone else may see things, so some of the differences in viewpoint may be very difficult to resolve. So I'm saying things as I see it(and as I hope a majority of the Senate will see it too), and I can't satisfy everyone all the time(though we do want to get consensus where possible), and representing as best I can what I think is in the best interests of my constituents.

[YE]

I won’t dive into the specifics of this bill too much but I will say I encourage the senators from the South to consider their input (who are my favorite 2 Feds in office now) and especially read Yankee’s bit regarding realism because it should be in the back of the mind of every senator. I will say though that I do think we need to increase taxes on the rich to bring down the deficit, and if it wasn’t for paygo, I’d advise making the increase marginal tax rates bit a separate bill.

[Pericles]

Reiterating the final vote motion.

[Mr. Reactionary]

Reiterating the final vote motion.

What is the anticipated budget score? If you lifted this from real life can you find a score? Otherwise we still dont know if this passes paygo.

[Lechasseur]

Reiterating the final vote motion.

What is the anticipated budget score? If you lifted this from real life can you find a score? Otherwise we still dont know if this passes paygo.

This, I think we should wait until we get the GM's estmations and see if it passes paygo or not

[Sestak]

I think one thing that is probably worth pointing out is that the underlying IRL legislation was written for a country with a $7.25 minimum wage and a 10% bottom tax rate, while we currently have a $10.50 minimum wage (set to further increase if the House passes the minimum wage text the Senate passed) and a reduction in the bottom tax rate is being discussed.

[Fmr. Representative Encke]

Not sure what's going on with this, since it's been more than 2 weeks since anyone has posted, but here's a Tax Policy Center cost analysis for a variety of different EITC increase proposals.

The relevant portion of the table is option (f), which describes the increases outlined in the real Brown-Khanna proposal: "Option increases the credit phase-in rates to 30%, 65.28%, 76.80%, and 86.40% for those with 0,1,2, and 3 children, respectively. Proposal also increases the end of phase-in and the beginning of phase-out income thresholds, and phase-out rate of childless workers to 15.98%, the same as for workers with one child. Finally, proposal reduces their eligibility age from 25 to 21."

This shows that the total cost for FY2019 would be 141.6 billion dollars, and the cost over 10 years (FY2017-26) would be 1.385 trillion dollars.

As for the tax increases, it's difficult to say how much that would affect revenue. The 2018 Atlasian budget numbers are not broken down by bracket, so I'm not sure what I should be using as a reference here. I've done a few estimates and it seems from a very preliminary estimate that the bill does in fact pass paygo, as the tax increases outlined in the bill would generate around 170 billion dollars in extra revenue. However, there are large error bars on this estimate (+/- 40 billion) and I will try to do a more detailed analysis later.

(Here's the link to the Brown-Khanna bill, since the table in the OP is very difficult to read, and here's the link to the relevant portions of the tax code)

[YE]

I think one thing that is probably worth pointing out is that the underlying IRL legislation was written for a country with a $7.25 minimum wage and a 10% bottom tax rate, while we currently have a $10.50 minimum wage (set to further increase if the House passes the minimum wage text the Senate passed) and a reduction in the bottom tax rate is being discussed.

To be fair, Khanna also supports a $15 minimum wage (yes, you know that but I'm not sure most Southern senators do as they don't follow Democratic politics IRL as much as the the rest of the body if I had to guess) so that means in his view, this proposal would be fine with a $15 minimum wage.

[Southern Senator North Carolina Yankee]

I think one thing that is probably worth pointing out is that the underlying IRL legislation was written for a country with a $7.25 minimum wage and a 10% bottom tax rate, while we currently have a $10.50 minimum wage (set to further increase if the House passes the minimum wage text the Senate passed) and a reduction in the bottom tax rate is being discussed.

To be fair, Khanna also supports a $15 minimum wage (yes, you know that but I'm not sure most Southern senators do as they don't follow Democratic politics IRL as much as the the rest of the body if I had to guess) so that means in his view, this proposal would be fine with a $15 minimum wage.

But Khanna supports both proposals against a backdrop of neither existing in a RL situation where the minimum wage is as Sestak said much lower and the other programs don't exist. It would be counterproductive for someone in that position to hold back when the whole discussion runs contrary to the objectives desired as to this point little has been accomplished in this regard here.

That is not the case here, we have a rather generous health subsidy, which is not the case in RL and we have higher a minimum wage. This backdrop allows us to be more discerning in our approach and to make choices rather than just copy/pasting the real life agenda of a RL politician, elements of which are probably dictated by throwing stuff at the board until it actually sticks or said better, the beginning of a negotiating position.

As to the minimum wage, I support it being in the neighborhood of $10-$12, indexed to inflation and also with a gradient based on living standards in a given area rather than having $15 be uniform for New York and Wayne County, NC.

[YE]

I think one thing that is probably worth pointing out is that the underlying IRL legislation was written for a country with a $7.25 minimum wage and a 10% bottom tax rate, while we currently have a $10.50 minimum wage (set to further increase if the House passes the minimum wage text the Senate passed) and a reduction in the bottom tax rate is being discussed.

To be fair, Khanna also supports a $15 minimum wage (yes, you know that but I'm not sure most Southern senators do as they don't follow Democratic politics IRL as much as the the rest of the body if I had to guess) so that means in his view, this proposal would be fine with a $15 minimum wage.

But Khanna supports both proposals against a backdrop of neither existing in a RL situation where the minimum wage is as Sestak said much lower and the other programs don't exist. It would be counterproductive for someone in that position to hold back when the whole discussion runs contrary to the objectives desired as to this point little has been accomplished in this regard here.

That is not the case here, we have a rather generous health subsidy, which is not the case in RL and we have higher a minimum wage. This backdrop allows us to be more discerning in our approach and to make choices rather than just copy/pasting the real life agenda of a RL politician, elements of which are probably dictated by throwing stuff at the board until it actually sticks or said better, the beginning of a negotiating position.

As to the minimum wage, I support it being in the neighborhood of $10-$12, indexed to inflation and also with a gradient based on living standards in a given area rather than having $15 be uniform for New York and Wayne County, NC.

Would Khanna withdraw his sponsorship of his bill if a $15 minimum wage though? That I'm not sure of but I felt the need to point it out just so everyone's on the same page.

[Lechasseur]

I think one thing that is probably worth pointing out is that the underlying IRL legislation was written for a country with a $7.25 minimum wage and a 10% bottom tax rate, while we currently have a $10.50 minimum wage (set to further increase if the House passes the minimum wage text the Senate passed) and a reduction in the bottom tax rate is being discussed.

Yeah, I think the minimum wage has to be risen by quite abit IRL, $7,25 isn't enough. On the other hand, $10,50 is just fine, especially with a low tax rate. We definitely don't need a $15 minimum wage, that will just destroy the Atlasian economy.

[Mr. Reactionary]

For those convinced that and/or campaigning on the idea that the deficit can be eliminated through only military cuts and taxes on "the rich", please take note that once again those deficit-cutting proposals are being looted to pay for something new rather than the large existing deficit. It is increasingly looking like the big tax changes in the revenue Enhancement act and this massive increase in tax rates including a 58% rate (which is evil) will result in little change to the deficit at all. I fail to see how the deficit can be reduced through rich taxes and military cuts given this strong push by 1 Senator to piss away the only deficit reductions the majority party has really advocated for. We couldn't even convince the Senate to eliminate a bunch of corporate welfare spending last fall.