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Get Ready for the Tax Sunset
Old 07-06-2011, 07:30 AM   #1
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Get Ready for the Tax Sunset

Most of the Politicians and Economic experts that are not playing politics seem to be have a common point of view.... Addressing our deficit and debt will take a combination of shrinking spending and more taxes.

What is not spoken by the "no tax" crowd.... they need (and want) the Bush tax cut extension to expire. Why?

It accomplishes two goals.

  1. If there were really drastic cuts to SS and Medicare... many of them would be tossed out... with a vengeance.
  2. Their favored constituents (extremely wealthy who pay for the lobbyist) made a bundle in the 1980's forward and then even more in the 2000 with the Regan and Bush tax cuts. Because the majority of the benefit went toward the extremely wealthy.

So, as usual, the middle class paid the first time (FICA over years), it was spent (because of lower taxes and with no intention of reducing spending by both parties), and now the middle class pays it back.

I like lower taxes as much as the next person... But it sure seems like the middle class is the group getting the short end of the stick!
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Old 07-06-2011, 08:58 AM   #2
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Originally Posted by chinaco View Post

So, as usual, the middle class paid the first time (FICA over years), it was spent (because of lower taxes and with no intention of reducing spending by both parties), and now the middle class pays it back.

I like lower taxes as much as the next person... But it sure seems like the middle class is the group getting the short end of the stick!
And I, as someone who is considered "wealthy" by all of Obama's measurements paid no FICA (over years) and am not paying it back now just as the middle class? Surely you jest! In addtion, last time I checked my overall tax rates (even in FIRE) are higher than the middle income brackets!

I agree that in order to address the deficits that increased revenues must be part of the equation...but as with any business, which the federal gov't is, you must also address runaway spending be it for social services or military. Everything has to be on the table IMHO.

It would be a lot easier for me to stomach higher tax rates if I felt that the reductions in the expense/spending side was truly being considered in a significant manner.

Now don't even get me started on the complexity of the tax code...a flat tax would be so much simpler and probably much more equitable among all whether it be lower, middle or upper.
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Old 07-06-2011, 09:00 AM   #3
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chinaco,
If you see the poll here on the rather simplistic question of smaller vs. larger government, I would say that the middle class is providing the sticks. It's been shown in other polls that people say this but, when asked specific questions about what the government should fund, people want everything from government but don't think anyone should pay and don't think "everything" should create debt.
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Old 07-06-2011, 09:01 AM   #4
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chinaco,
people want everything from government but don't think anyone should pay and don't think "everything" should create debt.
aka...Greece
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Old 07-06-2011, 09:39 AM   #5
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...people want everything from government but don't think anyone should pay and don't think "everything" should create debt.
Nope. I'm not greedy, and I don't want "everything". Just ensure the programs I paid for over many years (e.g. SS & Medicare) are there for the forseeable future, when I file a few years from now.

I paid for my ticket. Now I want to get on the ride. I don't think my ticket should be punched "invalid" just because I've been standing in line the last 40+ years while I have been paying (contributing) for that ticket.

Sure, my "payment" was for others to get on the ride ahead of me. However I do expect that when my time comes, I can "experience" the same as those that have come before.
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Old 07-06-2011, 10:01 AM   #6
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What is not spoken by the "no tax" crowd.... they need (and want) the Bush tax cut extension to expire. Why?
I agree with your assessment of what expiration would achieve but not with the view that the no tax crowd wants them to expire. They appear to have Norquisted themselves into a position where they have so demonized any flexibility on taxes that they would be tossed out of office by their core if they budged. The Dems, meanwhile, have essentially bought off on the need for 4/5 of the Bush cuts and are afraid they will get tossed from office if they tax anyone but the rich.

I think by now most of us have seen the CBO forecasts of what happens if the Bush cuts are allowed to expire (top chart) vs what happens under the plans to leave them in place (bottom). I don't see us cutting our way out of the bottom scenario.
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Old 07-06-2011, 10:28 AM   #7
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And I, as someone who is considered "wealthy" by all of Obama's measurements paid no FICA (over years) and am not paying it back now just as the middle class? Surely you jest! In addtion, last time I checked my overall tax rates (even in FIRE) are higher than the middle income brackets!

I agree that in order to address the deficits that increased revenues must be part of the equation...but as with any business, which the federal gov't is, you must also address runaway spending be it for social services or military. Everything has to be on the table IMHO.

It would be a lot easier for me to stomach higher tax rates if I felt that the reductions in the expense/spending side was truly being considered in a significant manner.

Now don't even get me started on the complexity of the tax code...a flat tax would be so much simpler and probably much more equitable among all whether it be lower, middle or upper.
When those that are productive only take away what the lowest workers make, only then will they be happy.

They won't be happy until they have it all. Until every business fails, Until all the jobs go away. They feel entitled to everything you have produced.

Their logic is not well thought through. They would rather everyone live in poverty - and all be equal than for some to reap the rewards of their own effort.
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Old 07-06-2011, 10:48 AM   #8
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Nope. I'm not greedy, and I don't want "everything". Just ensure the programs I paid for over many years (e.g. SS & Medicare) are there for the forseeable future, when I file a few years from now.

I paid for my ticket. Now I want to get on the ride. I don't think my ticket should be punched "invalid" just because I've been standing in line the last 40+ years while I have been paying (contributing) for that ticket.

Sure, my "payment" was for others to get on the ride ahead of me. However I do expect that when my time comes, I can "experience" the same as those that have come before.
And how do you get around this chart with that POV? Fact is, the generations before us got way more than their "payments" would have produced otherwise (not sure if we've crossed that line yet or not). You have not made any contributions toward your own Soc Sec, nor has any generation in the US. I've been standing in line for the last 35+ years, but I don't really think I'm going to get the benefit earlier generations got, how is that possible without gouging the generations that follow?
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Old 07-06-2011, 01:07 PM   #9
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... how is that possible without gouging the generations that follow?
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Old 07-06-2011, 04:49 PM   #10
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I think by now most of us have seen the CBO forecasts of what happens if the Bush cuts are allowed to expire (top chart) vs what happens under the plans to leave them in place (bottom). I don't see us cutting our way out of the bottom scenario.
I assume the top chart is if the Bush tax cuts expire for everyone, not just the "rich", correct?
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Old 07-06-2011, 05:12 PM   #11
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I assume the top chart is if the Bush tax cuts expire for everyone, not just the "rich", correct?
Yes, the Dems rich only approach helps a bit but not much.
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Old 07-06-2011, 05:17 PM   #12
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I am fine with paying a bit more in taxes. After all, we did in the 90s. And the economy was almost certainly better then.
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Old 07-06-2011, 06:08 PM   #13
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I am fine with paying a bit more in taxes. After all, we did in the 90s. And the economy was almost certainly better then.
Me too. I will pay in exact percentage more in tax that is cut from the budget. If they do an across the board 10% cut of every single program, I will gladly (well, might grumble a bit) pay 10% more in taxes.

10% cut in military, social security, medicare, medicaid, education, etc.

I will scrap together the 10% increase in taxes to send them.

Ok? done.
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Old 07-06-2011, 06:21 PM   #14
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Me too. I will pay in exact percentage more in tax that is cut from the budget. If they do an across the board 10% cut of every single program, I will gladly (well, might grumble a bit) pay 10% more in taxes.

10% cut in military, social security, medicare, medicaid, education, etc.

I will scrap together the 10% increase in taxes to send them.

Ok? done.
Seems fair, and I think some give on both the revenue side and the spending side is inevitable despite much of the (IMO tiresome) political and media rhetoric. However, I'm not holding my breath waiting for common sense to enter the picture. That'll happen only after all unreasonable approaches have been attempted first...
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Old 07-06-2011, 06:22 PM   #15
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Me too. I will pay in exact percentage more in tax that is cut from the budget. If they do an across the board 10% cut of every single program, I will gladly (well, might grumble a bit) pay 10% more in taxes.

10% cut in military, social security, medicare, medicaid, education, etc.

I will scrap together the 10% increase in taxes to send them.

Ok? done.
Not bad. That would certainly resolve the problems. Keep in mind, with a 10% cut in SS/Medicare benefits the overall costs would continue to rise dramatically as the huge boomer contingent comes online and as the country continues to grow after that. But your proposal would more than pay for it.
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Old 07-06-2011, 06:39 PM   #16
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Not bad. That would certainly resolve the problems. Keep in mind, with a 10% cut in SS/Medicare benefits the overall costs would continue to rise dramatically as the huge boomer contingent comes online and as the country continues to grow after that. But your proposal would more than pay for it.

It won't.

The 10% income tax hike would bring in another ~$ 90B

The accross the board cut would cut around $350B

The net decrease in deficit would then be ~440B.

yet the deficit problem is around twice that amount. And as the boomers retire it just gets worse. Granted a growing economy can take on additional debt but still, the pain need be higher than you have indicated. More taxes, more cuts will be required.
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Old 07-06-2011, 06:47 PM   #17
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It won't.

The 10% income tax hike would bring in another ~$ 90B

The accross the board cut would cut around $350B

The net decrease in deficit would then be ~440B.

yet the problem is around twice that amount. And as the boomers retire it just gets worse
I was looking her proposal as an increase of 10% in the tax rates (more than the Bush tax cut would provide and more than I would want to see). I assume you (and presumably the poster) are envisioning a 10% increase in her current tax rate from, for example, 15% to 16.5%. That wouldn't do it. But expiring the Bush cuts plus a 10% cost would do it.
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Old 07-06-2011, 06:53 PM   #18
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I was looking her proposal as an increase of 10% in the tax rates (more than the Bush tax cut would provide and more than I would want to see). I assume you (and presumably the poster) are envisioning a 10% increase in her current tax rate from, for example, 15% to 16.5%. That wouldn't do it. But expiring the Bush cuts plus a 10% cost would do it.
As I recall the bush tax cuts gave up around $150B in revenue.

Adding that amount in I get a deficit reduction of around $590B.

That's closer but still not there.

I beleive that we need still more pain than that. More taxes - more cuts.

This is going to be really hard and painful - to everyone. And it will come eventually, either by legislation... Or Greece style forced by creditors... or inflation style by the Fed printing dollars.
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Old 07-06-2011, 07:03 PM   #19
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It won't.

The 10% income tax hike would bring in another ~$ 90B

The accross the board cut would cut around $350B

The net decrease in deficit would then be ~440B.

yet the deficit problem is around twice that amount. And as the boomers retire it just gets worse. Granted a growing economy can take on additional debt but still, the pain need be higher than you have indicated. More taxes, more cuts will be required.
Is that right? I don't have the numbers for taxes and spending, but I meant a true increase of 10% in tax rate at every level. 0% goes to 10%, 15% goes to 25%, 30% goes to 40%. Individual and corporate. That has to be more than 90B.
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Old 07-06-2011, 07:08 PM   #20
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We could also go a long way toward cutting social programs and saving even more.

Budget x government dollars for purchasing rice and beans. Distribute these at depots in every major city. Cut all welfare programs. If you are hungry, go get some rice and beans for free.

Costa Rica eats mainly rice and beans and has a lot lower obesity than the US. Why do we give out $100 welfare credit cards that can be used at Walmart?
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