The Truth about Taxes

[chris4243]

The only politically possible way to make the necessary correction to our national balance-sheet, will be for leading Republicans to propose the substantial tax increase and the deep cuts to Defense Department spending, while at the same time leading Democrats propose the massive reform of Social Security, Medicare and Medicaid.

I think you don't understand what "politically possible" means.

 

[chaz345]

This is exactly what did not happen with the Reagan tax cut. Instead, the country would up with enormous deficits. When Reagan's successor, George H. B. Bush, raised taxes to lower the deficits, conservatives didn't like it, even though he was just correcting an inexcusable error by a previous administration. The Bush One tax increase helped paved the way for the virtual elimination of the deficit (but not the national debt) during the Clinton Administration. Yet, to this day, the reactionaries loathe the first George Bush as some kind of high taxer.

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The elimination of the deficit under Clinton had far more to do with an unprecedented growth bubble than it did with the tax rates of the time. Besides, to an extent tax rates don't matter, revenue will always be right around 18% of GDP. That's what it wqas back when the top rates were in the 70's and 80's and that's what it is now. And right now spending is (and has been for quite some time) around 24% of GDP.

 

[Umaro]

The elimination of the deficit under Clinton had far more to do with an unprecedented growth bubble than it did with the tax rates of the time. Besides, to an extent tax rates don't matter, revenue will always be right around 18% of GDP. That's what it wqas back when the top rates were in the 70's and 80's and that's what it is now. And right now spending is (and has been for quite some time) around 24% of GDP.

But it's not right around 18%, it's an average of 18%. Revenue as a percentage of GDP for 2009 and 2010 were 14.9%, substantially lower than what you claim. What are the revenue as percent GDP for 2000 and then say, 2002 after the Bush tax cuts went though? I highly doubt they're both 18%.

 

[chaz345]

But it's not right around 18%, it's an average of 18%. Revenue as a percentage of GDP for 2009 and 2010 were 14.9%, substantially lower than what you claim. What are the revenue as percent GDP for 2000 and then say, 2002 after the Bush tax cuts went though? I highly doubt they're both 18%.

That may be true, but on a long term basis it can't be moved that far from 18% for all that long. Over time it was around 18% when the top marginal rates were over twice what they are today. The point being a tax increase can't solve the problem. Sure it can "solve" it long enough to maybe get whichever clowns are in office re-elected but in terms of creating a long term sustainable situation, it just can't be done.

 

[revanneosl]

The only politically possible way to make the necessary correction to our national balance-sheet, will be for leading Republicans to propose the substantial tax increase and the deep cuts to Defense Department spending, while at the same time leading Democrats propose the massive reform of Social Security, Medicare and Medicaid.

I think you don't understand what "politically possible" means.

It's kind of an "only Nixon can go to China" thing. But sincerely, I still think the above is true, and that this is why we will not make the necessary correction to our national balance-sheet, but will instead experience a very painful collapse of our national economy.

 

[Steve Petersen]

Meanwhile, Canada is lowering their corporate tax rate.

 

[Corey]

Meanwhile, Canada is lowering their corporate tax rate.

And has single-payor insurance...hmmm...

 

[Steve Petersen]

And has single-payor insurance...hmmm...

So how do we keep businesses here if the can find a more favorable tax environment abroad?

 

[Corey]

So how do we keep businesses here if the can find a more favorable tax environment abroad?

Seriously? Really? You're posting that after GE made massive profits last years and not only didn't pay a dime in a taxes, but actually received a refund?

Seriously?

Your post takes massive guts or complete lack of information about current events.

 

[chaz345]

Seriously? Really? You're posting that after GE made massive profits last years and not only didn't pay a dime in a taxes, but actually received a refund?

Seriously?

Your post takes massive guts or complete lack of information about current events.

So what exactly would you do to increase tax revenue and at the same time bring jobs back to America? I'm asking because the "increase the corporate taxes" that much of the left believes in the beginning and end of the solution sure as heck isn't going to do it.

 

[blueapplepaste]

So what exactly would you do to increase tax revenue and at the same time bring jobs back to America? I'm asking because the "increase the corporate taxes" that much of the left believes in the beginning and end of the solution sure as heck isn't going to do it.

Lower our standard of living to that of a third world country? What we need to do is to close the loopholes. Incentivize the tax code for companies to reinvest their profits back into the company.

 

[revanneosl]

Tariffs people. Nothin' but tariffs. It's how how get jobs back, it's how we address our trade deficit. It's everything. Reinstate the tariff that Ronny Ray-gun got rid of.

 

[Steve Petersen]

Tariffs just result in trade wars.

Smoot-Hawley resulted in a 60% decrease in US exports.

 

[variant]

As I move into the top 5% of income in the United States, I am realizing the big secret. Part of it is actually mentioned in this article.

"It’s true that the top 1 percent of wage earners paid 38 percent of the federal income taxes in 2008 (the most recent year for which data is available). But people forget that the income tax is less than half of federal taxes and only one-fifth of taxes at all levels of government."

As my income has been exceeded my expenses for many years, I have been investing in stocks, bonds, and other securities. And do you know what the tax rate is on that income? Long term capital gains tax is at 15%.

As you move into the "upper tax bracket" less of your income comes from "wages" and less of your income gets taxed at the federal income tax level. Oh, as for the other taxes people pay (like social security and medicare?). That income stops getting taxed at a little over $100,000.

People keep complaining that the rich are bearing the brunt of the tax burden. That's just a load of hooey. Don't get me wrong, part of me I likes the fact that the poor and middle income folks in America are championing my cause - but I feel like they are being tricked into doing it.

Yes, the total tax burden actually comes from ALL the taxes you pay and it is by no means very progressive.

I love graphs.

CTJ in the News: April 2009 Archives

In actuality by lowering taxes on capitol gains, corporate taxes, and lowering the top federal rate for income earners are tax system has become much more flat as it shifts the total tax burden towards people whose income mainly comes from work instead of capitol gains and shifts responsibilities toward the states that have flatter overall taxation schemes.

If we moved to a "Fair Tax" system (flat for federal income) our taxation system would become horribly regressive overall.

 

[variant]

That may be true, but on a long term basis it can't be moved that far from 18% for all that long. Over time it was around 18% when the top marginal rates were over twice what they are today. The point being a tax increase can't solve the problem. Sure it can "solve" it long enough to maybe get whichever clowns are in office re-elected but in terms of creating a long term sustainable situation, it just can't be done.

I think you are arguing against yourself here, if we are short of 18% and 18% is the limit then we can safely say we are lower than maximum taxation even by Laffer curve standards.

Cutting effective taxation to 14% and running massive deficits is not going to work.

In fact your reasoning calls for a 4% GDP tax increase and a 6% GDP spending decrease which I can get behind.

 

[Corey]

So what exactly would you do to increase tax revenue and at the same time bring jobs back to America? I'm asking because the "increase the corporate taxes" that much of the left believes in the beginning and end of the solution sure as heck isn't going to do it.

That's an easy one: end the loophole that allows corporations to get a tax break for offshoring jobs. That's step one.

The next step: end subsidies for Big Agra and Big Oil. Neither need them.

The third step: protectionism parity...also called tit for tat. All protectionist barriers created by other nations will be replicated for goods that come into the US from those countries regardless of the ostensible nationality of the importing company. To prevent third-party shipping, all goods must have verified chain of control documentation attached.

Step 4: The immediate cessation of all free trade acts and the worldwide promotion of trade unions. Any country that cracks down on unions is blacklisted with massive tariffs.

 

[chaz345]

I think you are arguing against yourself here, if we are short of 18% and 18% is the limit then we can safely say we are lower than maximum taxation even by Laffer curve standards.

Cutting effective taxation to 14% and running massive deficits is not going to work.

In fact your reasoning calls for a 4% GDP tax increase and a 6% GDP spending decrease which I can get behind.

Not at all. I've never argued against tax increases in this case. I've been saying that tax increases can't solve the problem on a long term basis. Not when spending is, and has for a long time, averaged 24% of GDP. The problem is if piddling little cuts like what were just proposed are characterized as sky is falling, draconian and whatever else, and they didn't even come close to being 1% of GDP, it's obvious that the needed cuts will never happen.


I've also ben saying that we need the cuts first because history has shown us that what happens with a tax increase is that revenue goes up a bit, a few over optimistic projections are made, and suddenly we "don't need" the cuts anymore.


Also it's probably relevant to point out that the current tax revenue being what it is is as much because of our current massive unemployment as it is because of tax rate.

 

[Umaro]

Not at all. I've never argued against tax increases in this case. I've been saying that tax increases can't solve the problem on a long term basis. Not when spending is, and has for a long time, averaged 24% of GDP. The problem is if piddling little cuts like what were just proposed are characterized as sky is falling, draconian and whatever else, and they didn't even come close to being 1% of GDP, it's obvious that the needed cuts will never happen.


I've also ben saying that we need the cuts first because history has shown us that what happens with a tax increase is that revenue goes up a bit, a few over optimistic projections are made, and suddenly we "don't need" the cuts anymore.


Also it's probably relevant to point out that the current tax revenue being what it is is as much because of our current massive unemployment as it is because of tax rate.

But why is it OK to cut taxes without cutting spending then? The end result is the same as if you only raise spending. If anything, taxes should stay where they are until spending is cut, and nothing else.

 

[chaz345]

But why is it OK to cut taxes without cutting spending then? The end result is the same as if you only raise spending. If anything, taxes should stay where they are until spending is cut, and nothing else.

Where have I said it's OK to cut taxes in this context?

 

[jayem]

So how do we keep businesses here if the can find a more favorable tax environment abroad?

Going off the topic of taxes here, but one of the best things we can do for American business is the right kind of health insurance reform. Which specifically is to separate health insurance from employment. 60% of private health coverage in the US is provided by employers--who also pay the lion's share of the premiums. Collectively, it's a huge and constantly growing expense; and it gives foreign competitors--who operate in countries with national health plans--a competitive edge. Freeing American companies from the burden of providing health insurance would be an enormous boost to business creation and hiring. And having more taxpayers, might mitigate the need for higher tax rates. My biggest disappointment with the PPAC Act is that it didn't address this.

End of sermon. Back to the topic.