Spooky Obama

[Bond]

Weird.

[Fox 6]

DE-FAULT!

[bigTeedy]

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[manasecret]

I can not help wonder -- what are the Republicans in the House thinking? They all seem perfectly fine with pushing the U.S. into default.

Why do I say that? Because as part of the legislation they passed, the cut, cap, and balance one (thank you Harvard comma), an amendment to the Constitution must be passed on a deeply political and divided issue (i.e. spending). They can't possibly think that had any chance to pass, even before the Senate and President outright said they wouldn't pass it. So it seems to me they are ok with steering the U.S. into default over political bluster that most Americans don't want -- the large majority want compromise that includes both cutting spending and raising taxes.

So in conclusion, wtf is wrong with these guys in the House?

[Professor S]

Originally Posted by manasecret

I can not help wonder -- what are the Republicans in the House thinking? They all seem perfectly fine with pushing the U.S. into default.

Why do I say that? Because as part of the legislation they passed, the cut, cap, and balance one (thank you Harvard comma), an amendment to the Constitution must be passed on a deeply political and divided issue (i.e. spending). They can't possibly think that had any chance to pass, even before the Senate and President outright said they wouldn't pass it. So it seems to me they are ok with steering the U.S. into default over political bluster that most Americans don't want -- the large majority want compromise that includes both cutting spending and raising taxes.

So in conclusion, wtf is wrong with these guys in the House?

Just to note: Cut, Cap, and Balance does not require implementation BEFORE the default period. That is impossible because 2/3 of the states have to ratify the amendment. Its just a part of the process.

The real problem right now is that neither side trusts the other. Example: Obama's plan would cut the budget by billions, but not cut any actual spending. How is that possible? Our budget is going to grow each year going forward, and Obama's plan only reduces the rate that it increases. There are no real spending cuts. Also, Obama's plan would raise taxes immediately, but promise to cut budgets in the future. This was tried once before at the beginning of Reagan's term. The taxes were real, the cuts were never realized. Reagan believed that agreeing to that "compromise" was one of the biggest mistakes of his career.

Also, I think the Republicans are being unreasonable, and stupid, by publicly stating that no tax increases are on the table regardless of cuts. I'm for removing loopholes, but lowering the overall rate to help encourage real growth.

The truth is the solution is easier than anyone really thinks:

1) Install a progressive flat tax: All income up to $38,000 pays no federal income taxes. Every dollar above that number is taxed at 25%. This way everyone can plan accordingly, and in the end the rich pay more in taxes simply because a far higher percentage of their income is above the $38k threshold. Also, no one is punished for succeeding. NO LOOPHOLES.

2) Eliminate the corporate tax. Corporations do not pay taxes. People do (investors, employees, or customers) so let them pay taxes with their income and not provide corporate loopholes so they can hide their income.

3) Pass a balanced budget amendment.

[Bond]

Originally Posted by Professor S

1) Install a progressive flat tax: All income up to $38,000 pays no federal income taxes. Every dollar above that number is taxed at 25%. This way everyone can plan accordingly, and in the end the rich pay more in taxes simply because a far higher percentage of their income is above the $38k threshold. Also, no one is punished for succeeding. NO LOOPHOLES.

This is the best way to encourage economic growth, and in turn raise tax revenue. Raising taxes is rarely about raising revenue -- it's just politics.

[KillerGremlin]

The progressive flat tax is the best idea ever, and it will never happen.

I've really given up on this country's political system...when the middle class truly hits financial fallout there is going to be rioting and all the gated millionaires+ better watch themselves.

Obama is a good public speaker though.

[thatmariolover]

Originally Posted by Professor S

1) Install a progressive flat tax: All income up to $38,000 pays no federal income taxes. Every dollar above that number is taxed at 25%. This way everyone can plan accordingly, and in the end the rich pay more in taxes simply because a far higher percentage of their income is above the $38k threshold. Also, no one is punished for succeeding. NO LOOPHOLES.

2) Eliminate the corporate tax. Corporations do not pay taxes. People do (investors, employees, or customers) so let them pay taxes with their income and not provide corporate loopholes so they can hide their income.

3) Pass a balanced budget amendment.

1) Is a cool idea. But there's a tiny minority of people with a growing majority of the cash flowing through this country. If these people are going to continue to consolidate wealth at this rate, they need to put it back into the economy. They're not doing it by choice, they're not creating (nearly enough) jobs, and they need to be taxed a hell of a lot more than 25%.

2) Yes. And corporations shouldn't be "people". It's a joke.

3) Obviously easier said than done.

[Professor S]

Originally Posted by thatmariolover

1) Is a cool idea. But there's a tiny minority of people with a growing majority of the cash flowing through this country. If these people are going to continue to consolidate wealth at this rate, they need to put it back into the economy. They're not doing it by choice, they're not creating (nearly enough) jobs, and they need to be taxed a hell of a lot more than 25%.

TML, I understand your anger at the realities of this economy, but the facts simply don't support your argument.

1) Over 80% of the revenue lost from the Bush tax cuts came from the middle class, not the rich. Even if the rich pay a higher tax rate, there simply isn't enough of them to counter the sheer revenue generation power of the vast majority of those who make under $250K.

2) If you tax the rich (top 1%) at 100% they would only generate about $300 billion a year in revenue, and we'd still be over $1 trillion away from a balanced budget.

3) Regardless of tax rate, revenues have remained relatively stable as a percentage of GDP over the long term. The correct tax policy is the one that promote growth, not increase marginal rates. More money taxed = more money hidden from the economy. At best rich people are smarter than the IRS and put money in tax shelters. At worst they simply buy your favorite politician so tax laws don't affect them.

Taxing the rich at a higher rate sounds wonderful and full of righteous justice, and may make people feel better, but it does nothing except hurt growth and therefore tax revenue.

2) Yes. And corporations shouldn't be "people". It's a joke.

Corporations do not pay taxes, people do. Taxes laid on corporations can be paid by three groups of people:

1) The investors through lowered profits/dividends/stock value, etc.

2) The employees through reduced pay, benefits, amenities, resources, etc.

3) Or the consumer through increased prices.

You get three chances to pick the right answer, and the first two don't count.

Since taxes on corporations are also laid on their competition, there is no competitive advantage to NOT passing it on. So you want to tax corporations at a high rate? Congratulations, you just gave yourself a hidden value added tax and lost jobs overseas.

Now that's if they pay taxes at all, which many don't, but in that case what is the point of raising taxes they don't pay? Answer: Social justice a great political tool even if it's lousy in practice.

3) Obviously easier said than done.

Most things that are right are not easy.

[Bond]

Originally Posted by Professor S

3) Regardless of tax rate, revenues have remained relatively stable as a percentage of GDP over the long term. The correct tax policy is the one that promote growth, not increase marginal rates. More money taxed = more money hidden from the economy. At best rich people are smarter than the IRS and put money in tax shelters. At worst they simply buy your favorite politician so tax laws don't affect them.

This point can't be overstated... it's hardly ever addressed in the mainstream media.

[Dylflon]

Originally Posted by Professor S

2) Eliminate the corporate tax. Corporations do not pay taxes. People do (investors, employees, or customers) so let them pay taxes with their income and not provide corporate loopholes so they can hide their income.

I agree with your tax points in that first page post. However, I feel that the rich could take a tax hit of over 25% and it still not be punishment for success. I think in the 50s the wealthiest members of the country had a tax hit of over 90%. I'm not saying go that far but still, everyone seems to think the 50s were great.

As for the corporate tax: isn't the problem that CEOs and high ranking employees of companies claim smaller incomes to avoid taxes? They are able to tie up their money in stocks and other things that are not taxed. Is there a way to tax stocks so that the rich are taxed accordingly?

Also, since corporation are by law seen as individuals now, shouldn't a certain percentage of a company's profit be taken as taxes? Or at the very least corporations could be given tax breaks for reinvesting some of their profits in the community.

[Professor S]

Originally Posted by Dylflon

I agree with your tax points in that first page post. However, I feel that the rich could take a tax hit of over 25% and it still not be punishment for success. I think in the 50s the wealthiest members of the country had a tax hit of over 90%. I'm not saying go that far but still, everyone seems to think the 50s were great.

On the face, this is true, but dig a little deeper and there are a lot of caveats.

1) No one paid 90%+ tax rates. They put money into tax shelters. The intent of the high taxes was to force corporations into investing in their companies. You can argue that worked, but there are mediating factors below.

2) During the 50's and early 60's the rest of the capitalist industrialized world was still putting the pieces back together from WW2. The US was the world's manufacturer. Also, communists didn't participate. Now China and Russia are becoming trade behemoths.

3) Even with a 90% tax rate, and being the world's manufacturer, taxes as a percentage of GDP topped out at about 22%, the same revenue rates generated in the 1990's with a 38% top tax rate. Again, its not about rates, its about GDP.

As for the corporate tax: isn't the problem that CEOs and high ranking employees of companies claim smaller incomes to avoid taxes? They are able to tie up their money in stocks and other things that are not taxed. Is there a way to tax stocks so that the rich are taxed accordingly?

Sure, tax all personal revenue/income at the same flat rate. This way no one is rewarded for hiding money and the government doesn't get the screw everything up by creating artificial demand for various investment products. Also, only tax income/revenue ONCE, and never twice.

Also, since corporation are by law seen as individuals now, shouldn't a certain percentage of a company's profit be taken as taxes? Or at the very least corporations could be given tax breaks for reinvesting some of their profits in the community.

Let me clarify: Corporations are NOT (or should not be) people in and of themselves. They are a entity controlled by and for people. As for taxes, they are simply passed on to the consumer. Taxes don't impact much in the way of corporate decision making because all corporations share the same burden. There is no incentive to absorb the cost.

Tax breaks or incentives for specific corporate actions can be disastrous. A large part of our recent troubles were caused by incentives given from the government through Fannie and Freddie to banks for handing out high-risk loans to people who couldn't afford them. This was in an effort to encourage reinvestment in the community. Banks made loans they never would have considered making without intervention and central planning.

In the end, much of these good intentions end up creating a snowball of mal-investment that creates crashes.

Last comment: Many people are currently misunderstanding capitalist concepts with corporatist concepts. Much of what people find objectionable and unfair about what is going in between government and industry is not capitalist. Capitalism is about profit and LOSS, loss being just as important. Today we are a system of profit, bailout, intervention, and stimulus. They are corporatist ideas.

[Bond]

Originally Posted by Dylflon

I agree with your tax points in that first page post. However, I feel that the rich could take a tax hit of over 25% and it still not be punishment for success. I think in the 50s the wealthiest members of the country had a tax hit of over 90%. I'm not saying go that far but still, everyone seems to think the 50s were great.

World War II. Our economic policies could have been complete garbage in the 50's and we still would have seen remarkable growth.

As for the corporate tax: isn't the problem that CEOs and high ranking employees of companies claim smaller incomes to avoid taxes? They are able to tie up their money in stocks and other things that are not taxed. Is there a way to tax stocks so that the rich are taxed accordingly?

CEOs & Co. will siphon off their money to offshore entities to evade taxes. Moving money into investments isn't really the problem, those earnings are taxed at a fairly high rate.

Also, since corporation are by law seen as individuals now, shouldn't a certain percentage of a company's profit be taken as taxes? Or at the very least corporations could be given tax breaks for reinvesting some of their profits in the community.

It already is. You're looking at standard double taxation of dividends paid out to shareholders. Stories like GE paying no taxes for a fiscal year are only true because the tax code is bonkers.

[manasecret]

Na-na-na-na-na-na-na-na XRumer!

[Bond]

Well, looks as though the debt debacle is now over. Hopefully the focus will now be on creating economic growth, which would create jobs and decrease the deficit at the same time.

One issue that I don't think receives enough attention is the unemployment rate broken across education levels:



Those with doctoral, professional, and masters degrees are experiencing better than technical full employment, while those with a high school diploma or less are hit the hardest. Or, in other words: there was no recession for those with higher education.