Increasing taxes?

[Birchwood]

I don't have an Economics background, so it's just my personal opinion.
I could not understand how we can solve our financial crisis without somehow increase in taxes. I don't think cutting expenses alone will do it.
I heard people saying they want smaller government. I could not understand that either. What are we going to do? cut medicare and other entitlement that people really loves.

Can we have opinions without being political?

[rescueme]

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Originally Posted by Birchwood Can we have opinions without being political?

...

[JPatrick]

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Originally Posted by Birchwood I don't have an Economics background, so it's just my personal opinion. I could not understand how we can solve our financial crisis without somehow increase in taxes. I don't think cutting expenses alone will do it. I heard people saying they want smaller government. I could not understand that either. What are we going to do? cut medicare and other entitlement that people really loves. Can we have opinions without being political?

Guvmint is a whole lot bigger than just medicare and SS.
The opportunities for reduction are vast..
The velocity by which people demand entitlements, at every level of guvmint, will determine the need for tax increases in the future and I see no way to escape them---them being the demanders and the taxers..
Disclosure: My definition of entitlements is far beyond the two entitlements mentioned here...way, way, beyond..

[ERD50]

Quote:

Originally Posted by Birchwood I don't have an Economics background, so it's just my personal opinion. I could not understand how we can solve our financial crisis without somehow increase in taxes. I don't think cutting expenses alone will do it. I heard people saying they want smaller government. I could not understand that either. What are we going to do? cut medicare and other entitlement that people really loves.

All you need is algebra.

Can we balance the budget by only cutting expenses? Yes.
Can we balance the budget by only increasing taxes? Yes.

After that, it's tough to avoid people's political views.

What's not to understand about smaller government? The Feds are involved (IMO) in all sorts of areas that they should just get out of (and the worst part of this, is it distracts them from real beneficial programs). And the comment about people 'loving' their entitlements goes to the heart of politics - it should not be a question of what people 'love' (who would not 'love' Other People's Money?), it should be a question of what does the govt need to provide to maintain a stable environment where people are free to pursue their dreams.

I just read about a more local issue, our IL Tollway system is doubling their Tolls. It was described as a 'jobs program' geared towards getting votes. Those in control want that tax money so they can dish it out to their favorite contributors. The basic function of providing suitable infrastructure is farther down on that list.

Cutting the budget in one fell swoop does not seem realistic to me. Restructuring our govt and what people should expect as 'services' could be done over a 20 year period though, I think.


Raising taxes w/o deep cuts would have consequences too. We are seeing the effect in IL - some companies that can move are moving. Some companies with enough clout are asking for tax breaks and getting them (with the threat of moving). I'm certain that many other companies are planning that any future expansion will take place in another state.

How would you raise Federal Taxes 40%? Where would it come from? I don't think there are enough Buffets around to fund that. Can you do that math?

So yes, it gets political.

edit/add - I find it interesting that you seem convinced that we can't do it by just cutting expenses. Yet, you also seem convinced that we can do it by raising taxes. What makes you so certain that one can and the other can't?


-ERD50

[JPatrick]

Quote:

Originally Posted by ERD50 All you need is algebra. Can we balance the budget by only cutting expenses? Yes. Can we balance the budget by only increasing taxes? Yes. After that, it's tough to avoid people's political views. What's not to understand about smaller government? The Feds are involved (IMO) in all sorts of areas that they should just get out of (and the worst part of this, is it distracts them from real beneficial programs). And the comment about people 'loving' their entitlements goes to the heart of politics - it should not be a question of what people 'love' (who would not 'love' Other People's Money?), it should be a question of what does the govt need to provide to maintain a stable environment where people are free to pursue their dreams. I just read about a more local issue, our IL Tollway system is doubling their Tolls. It was described as a 'jobs program' geared towards getting votes. Those in control want that tax money so they can dish it out to their favorite contributors. The basic function of providing suitable infrastructure is farther down on that list. Cutting the budget in one fell swoop does not seem realistic to me. Restructuring our govt and what people should expect as 'services' could be done over a 20 year period though, I think. Raising taxes w/o deep cuts would have consequences too. We are seeing the effect in IL - some companies that can move are moving. Some companies with enough clout are asking for tax breaks and getting them (with the threat of moving). I'm certain that many other companies are planning that any future expansion will take place in another state. How would you raise Federal Taxes 40%? Where would it come from? I don't think there are enough Buffets around to fund that. Can you do that math? So yes, it gets political. edit/add - I find it interesting that you seem convinced that we can't do it by just cutting expenses. Yet, you also seem convinced that we can do it by raising taxes. What makes you so certain that one can and the other can't? -ERD50

Illinois taxpayers fight back..
Township's New Office Plan Succumbs to Taxpayer Anger - WSJ.com

[GregLee]

Raising taxes will work so long as someone else has to pay. We might target rich people or our children.

[ERD50]

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Originally Posted by GregLee Raising taxes will work so long as someone else has to pay. We might target rich people or our children.

I seriously feel that targeting the children (which is essentially what we do when we go into debt), is "taxation without representation".

Now, if you want to float a municipal bond, for say a water supply facility, and the revenue from the water bills can pay the interest on the bond each year and cover annual operational costs, I think that is legitimate. But simply spending more than we take in and running up the tab on future generations who cannot vote, is just wrong, IMO.

Quote:

Originally Posted by JPatrick Illinois taxpayers fight back.. Township's New Office Plan Succumbs to Taxpayer Anger - WSJ.com

Nice to see them taking action. As some of the comments state, I'd rather see this go to referendum so all voters can have a say, rather than a sub-group that showed up for this meeting. But it looks like it was the only option for them. Good for them.

-ERD50

[ziggy29]

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Originally Posted by GregLee Raising taxes will work so long as someone else has to pay. We might target rich people or our children.

And as long as everyone else's pet spending programs are cut -- not mine.

Seriously, that is a big part of the budget deficit problem. Many people agree we need both tax increases and spending cuts. The problem is that they want everyone else's taxes raised -- not their own -- and want other people's spending cut -- not theirs. And they tend to scream bloody murder when they realize they will be a part of the shared sacrifice. So nothing gets done, we kick the can down the road a bit, and the problem gets worse.

[scrabbler1]

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Originally Posted by ziggy29 And as long as everyone else's pet spending programs are cut -- not mine. Seriously, that is a big part of the budget deficit problem. Many people agree we need both tax increases and spending cuts. The problem is that they want everyone else's taxes raised -- not their own -- and want other people's spending cut -- not theirs. And they tend to scream bloody murder when they realize they will be a part of the shared sacrifice. So nothing gets done, we kick the can down the road a bit, and the problem gets worse.

Very, very well put! I would have written it just the same way, as it sums up very succinctly.

[harley]

All we need is a series of idealistic legislators who don't seek personal gain or power. Ones who would be willing to go through the process of getting elected so they can slash spending, pretty much guaranteeing they won't be re-elected. I'll start holding my breath...now!

[JPatrick]

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Originally Posted by harley I'll start holding my breath...now!

medic, medic.....We need help here!

[grumpy]

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Originally Posted by Birchwood I don't have an Economics background, so it's just my personal opinion. I could not understand how we can solve our financial crisis without somehow increase in taxes. I don't think cutting expenses alone will do it. I heard people saying they want smaller government. I could not understand that either. What are we going to do? cut medicare and other entitlement that people really loves. Can we have opinions without being political?

There is a difference between raising taxes and raising revenue. Raising taxes is usually interpreted to mean raising tax rates. However, raising tax rates may not result in increased gov't revenue if the higher tax rates have the effect of slowing the economy. In a slow economy peoples' (on average) taxable income will be lower so the same tax rate may generate less income or a higher tax rate may only generate the same income.

This is the same problem that businesses face if they want to increase revenue. Should they raise prices or will that drive away customers? Should they lower prices in hopes that this will increase sales enough to more than offset the price reduction?

What it comes down to is that the solution is not as simple as just raising taxes. If it was, that would have happened long ago.

[Birchwood]

My opinion is that, we have to may more taxes and expect less benefits, as time goes on. The only thing that may change is if our economy grows tremendously and there will be more taxpayers putting the bill and
getting less. Oh, I forgot, China Brazil, HOngkong, and others will lend us money?

[Gone4Good]

Here's some more algebra for you . . .

"Old age support" programs (Medicare & SS) = 40% of Federal Spending
Growth in the ranks of the elderly > Growth in the ranks of working age
Older people's need for medical care > the needs of the young
Medical cost growth rate > general inflation

Add all of this together and you get the following truth . . .

Future Government Spending Growth > Future GDP Growth

That's just the way it is. All the discretionary spending cuts in the world won't change that fact.

[flyfishnevada]

Quote:

Originally Posted by Birchwood I heard people saying they want smaller government. I could not understand that either. What are we going to do? cut medicare and other entitlement that people really loves.

I can't understand how we are going to survive without a smaller government. SS, Medicare, welfare, etc. are all new ideas. This country did fine without them for 150 years, in fact thrived without them. It's not about how much people love these programs, it's about whether or not the federal government should be involved in health care, retirement and paying people not to work. It's about actually being able to afford these programs. We can't pretend the direction we are heading is the right direction. We did much better as a nation when the government was small and our taxes low. some say that's harsh, I call that freedom.

[ERD50]

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Originally Posted by Gone4Good Here's some more algebra for you . . . "Old age support" programs (Medicare & SS) = 40% of Federal Spending Growth in the ranks of the elderly > Growth in the ranks of working age Older people's need for medical care > the needs of the young Medical cost growth rate > general inflation Add all of this together and you get the following truth . . . Future Government Spending Growth > Future GDP Growth That's just the way it is. All the discretionary spending cuts in the world won't change that fact.

Who says SS and medicare have to follow past history?

The US spends more per capita on HC than most other countries and has worse results. Just maybe some changes could improve that ratio. But it will never happen if the only answer offered is "throw more money at it".

-ERD50

[ERD50]

Quote:

Originally Posted by Birchwood My opinion is that, we have to may more taxes and expect less benefits, as time goes on. The only thing that may change is if our economy grows tremendously and there will be more taxpayers putting the bill and getting less.

I agree - a combo is probably needed. I don't see any reason that the US will have an economy that grows faster than others. Just not sure what would drive that.

-ERD50

[Gone4Good]

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Originally Posted by ERD50 The US spends more per capita on HC than most other countries and has worse results. Just maybe some changes could improve that ratio. But it will never happen if the only answer offered is "throw more money at it". -ERD50

And how exactly do we slow the rate of government spending on health care?

I recall one conservative entirely sensible recent attempt to have the government investigate the cost effectiveness of various treatments. Public reaction wasn't 'entirely sensible' to put it in the most charitable way possible.

The problem with growing health care costs is that we don't really know how to slow them down. We have tons of ideas that might help (many of which are included in ACA), but we can't say for certain "If we do X, we'll reduce our spending by Y." It just doesn't work that way. The only way we know that will work 100% is to say to older people, we're not going to pay as much for you health care as we used to. That is one option . . . but one that isn't even being discussed. The "boldest" plan out there leaves everyone 55 and older untouched.

[Birchwood]

One of the problem(secret) of HC is that most of the expensive HC are done in the last 6 months of a person's life. Those(us) older folks have more say & clout on how money is goingto be spend than, the young single mother with two small kids, although the two small kids should be cared for as well, since they become future worker, and taxpayers.

If you want to reduce cost, go with the socialized system like Sweden.
Single payor, deal with the basic care only, anything extra, you have to pay yourself. The problem is who decide which is basic and extra!

We Americans are also greedy and egocentric. We think only of ourselves.
We talk about reducing HC cost, until we get sick and wants everything, the latest and so called state of the art, whether it works or not, and don't care about the cost or impact on society.

FDA just approved of a drug which cost 100K that will only increased life for a few months(cancer). That 100K will go a long way in preventive care, screening etc.

[ERD50]

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Originally Posted by Gone4Good And how exactly do we slow the rate of government spending on health care? I recall one conservative entirely sensible recent attempt to have the government investigate the cost effectiveness of various treatments. Public reaction wasn't 'entirely sensible' to put it in the most charitable way possible. The problem with growing health care costs is that we don't really know how to slow them down. We have tons of ideas that might help (many of which are included in ACA), but we can't say for certain "If we do X, we'll reduce our spending by Y." It just doesn't work that way. The only way we know that will work 100% is to say to older people, we're not going to pay as much for you health care as we used to. That is one option . . . but one that isn't even being discussed. The "boldest" plan out there leaves everyone 55 and older untouched.

You're right. Nothing can be done. There is one and only one solution - raise taxes, keep spending. That's the ticket.

One small example comes to mind - I'm going by memory here, but I recall that someone on medicare can rent a wheelchair for 6(?) months at a cost several times greater than what they could buy it for. If something that crazy is going on, there must be plenty of places to cut.

here we go:

Waste watch: Medicare admits overpaying for items like wheelchairs - News - Tom Coburn, M.D., United States Senator from Oklahoma

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WHAT: Medicare pays $800 to rent a wheelchair that retails for $350

You seem to confuse "they haven't done anything yet" with "what could be done". You know, I think maybe the reps who wanted the debt ceiling frozen had the right idea - nothing is going to change unless it is forced.

In the private sector, we were often challenged to do something we thought we could not accomplish. And often, we did get it done, or at least came close and made substantial progress. But if you are not challenged, no way will you achieve it.


-ERD50