Tax Cuts Extended to All Americans

[ERD50]

Well, this is a lot to munch on. I appreciate the discourse, but I just have time for a portion of this for now...


(edited before submitting) arggggh, I just deleted a bunch, it's just getting so long and circular. I'll try to condense it down to this:

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Originally Posted by Independent I don't think that progressive taxes cause any harm to our economy just because they sometimes impact successful manager/owners. The before-tax rewards of those jobs are high enough to attract plenty of people even with progressive taxes.

This just continues to ignore the laws of supply demand. It may attract 'plenty' but it will attract less at lower effective compensation. How can that not cause 'any harm'? We had 'plenty' of gasoline at $4.00/gallon, but it slowed the economy. I'm sorry, but it's hard to discuss this sensibly if one continues to ignore the effects of that.

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Apparently we've been talking past one another. I'm not claiming that taxing the high income has no impact, I'm saying the impact isn't greater.

Apparently. But it's tough since the bolded sections seem to contradict each other. And it's getting too long to go back through all the old posts to reconstruct, so how about you concisely restate what it is you are trying to say with regard to the tax proposals?

I'll restate mine: Spreading any tax increases across all taxpayers is likely to get them voting for more sensible government policies and reduced spending, since the spending affects them more directly. The 'rich' already pay a very high % of FIT, with the lower 50% of filers paying very little.

I won't take it at face value that the 'rich' have more influence on political policies, there are big voting blocks of non-rich with plenty of power. I'd give examples, but it would drive this further into political hot territory.

-ERD50

[GregLee]

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Originally Posted by ERD50 That doesn't seem so controversial does it? Or anything for people with different viewpoints to get upset about?

No, not at all. We're just trying to make sense of things.

[myself]

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Originally Posted by ERD50 But I'll re-repeat myself - I am thinking that raising taxes on everyone to the point that we would balance the budget and make a dent in the debt would get enough voters attention to actually start changing policy approaches. Announce a 10 year phase in to give people time to think about what it means. Of course, politicians won't do this, they hope to kick the can down the street. One of these days I'm afraid they are going to find an angry mob at the end of that street, picking up the can and looking to do some damage. ... I'm in favor of progressive taxes. And tax simplification so that actually has some meaning. I just don't like the knee-jerk reaction that taxing the rich even more, while half the filers pay such low single-digit average FIT is a slam-dunk 'solution'. -ERD50

That's something that i'd be all for too (no write-offs, super tax simplification, etc.). But like you said, it would have to be phased in, lest there be more increased unemployment because people are paranoid about how the modified tax rules would affect their paycheck.

[NW-Bound]

But, but, but eventually we will get past the point of talking and have to decide on a policy, boy, oh boy, people will get back into disagreement fast and furious...

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Originally Posted by ERD50 ... That doesn't seem so controversial does it? Or anything for people with different viewpoints to get upset about? Let's just understand what we are doing, and do the best we can we can with what we have. It's basic common sense, who can disagree? -ERD50

The students in London are disagreeing violently that their college costs will be tripled from about US$5000/yr to US$15000/yr and they are letting their opinion be heard. On 12/9/2010, Prince Charles' car was spotted on his way to a charity event, and was attacked by a student mob chanting "Off with their heads". A car window was smashed and a can of paint was splashed. A commentator said that it could have been worse, as many protesters carried gasoline and could have used that. What Charles has got to do with this tuition increase, I don't know, other than being in the wrong place at the wrong time.

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Originally Posted by FreqFlyer Kids in America run up massive student loans while majoring in art history or (gasp) french literature.

Eh? What do you have against French literature? Or are you against all literature?

Anyway, I don't think these protesting students in London were studying literature.

Or do they?



Well, enough kidding around.

No matter how the income tax is proportioned among different income levels, the citizenry should always ask how the tax shall be used. We are all users of the services that our government provides, and we are within our rights to ask for our money's worth, yes?

Regarding how the income tax should be levied, I have seen this subject coming up so many times before, although I have not been here all that long. Same as ERD50, I do not mind a mildly progressive tax, and with most of the loopholes and deductions taken out for a simplified tax code. For example, no more mortgage deductions. That would have alleviated the housing bubble and bust that we suffered from. No silly tax code that allows the deduction of the Hummer - which satisfies the 6000-lb requirement - for business use like that of a realtor in my area.

And back to the education discussion... Let's not talk about how useful or practical the study of French literature is. I want to ask what the cost of that study should be. How much does it cost to purchase some old classics, and to hire a good professor, whose lectures can now be shared via video? As with any public endeavor, we should ask how we can achieve the same result by spending more wisely, and not just by throwing more money at the problem.

[Texas Proud]

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Originally Posted by lets-retire Which was kind of my point. If I don't receive the benefits offered by the taxpayer from going to a public school, then the argument that I have to pay higher taxes because I have benefited from the taxpayer subsidizing my education loses its effect. An argument can be made that instead of paying back the taxpayer, I should have to pay back whatever private industry subsidized my education, but that is a bit off topic.

Except I never made that argument (that you should pay more because you benefited from subsidized education)... and I don't think anybody else did... maybe you can find that a bring it to my attention...

My point was that anybody who says they got where they are today with only their hard work and nothing from anybody else is just wrong... that is what I was trying to point out...

What others were trying to say (and I am not anywhere near a fan of this argument) is that because of the US system, your hard work can pay off handsomely and THAT is why you should pay more taxes.... to support that system....

[Texas Proud]

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Originally Posted by Westernskies With all due respect, many of us on the board here understand exactly how our society is working. Although everyone in the US is provided an education and multiple opportunities to make what they want out of life, there is a growing segment of our population that smugly thinks it knows better than the rest how to build the Utopian society it envisions for it's like-minded citizenry; all they need are unlimited funds and a lack of accountability to accomplish their lofty goals. For some reason, they can't quite seem to raise the funds necessary to fund all of their ever-expanding programs on their own, so they feel compelled to force their neighbors to pay a much larger share of the bill by wringing their hands and waving a banner of self-serving morality. I do understand this- the Government never gave anyone something that it didn't take away from someone else first. The government doesn't create wealth, commerce does. Maybe the class warfare so ominously predicted in this thread should come from the top down, not the bottom up? We are several generations down the road with failed feel-good entitlement programs, our educational systems are failing, and our infrastructure is falling apart. Our government has expanded while the economic engine that generates the funds to pay for it has faltered. What we need is to reduce the size of the public sector, wean able-bodied adults away from the public trough, and demand accountability for what we already pay in taxes, not impose punitive taxes on those who already pay the vast majority of taxes in this country. Imagine how healthy we would be if we were able to put everyone on welfare/food stamps/ 99+ week unemployment, etc. who is physically able to work into a tax-generating private sector job? Shake your fist and express moral outrage at the very concept, but I believe it's the first step in making people accountable for themselves and not expect Uncle Sugar to provide for their day-to-day existence. I also understand that it takes money to run our government, and provide essential services, and have no problems paying my fair share of taxes for this. I do have a problem when people tell me I am receiving more benefits from our government than others and therefore I need to write a bigger check each year for reparations.

And I think this is a well thought out response... and I agree with this point of view...


To me, someone who says that we have to 'do both, raise taxes and cut spending' just does not know enough areas to cut.... I can do it with only cuts and I bet there are many more that could.... Heck, I think if we went back to say spending at the year 2000 levels we could balance the budget.... (have to check on this... just throwing out a thought)....

[lets-retire]

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Originally Posted by Texas Proud Except I never made that argument (that you should pay more because you benefited from subsidized education)... and I don't think anybody else did... maybe you can find that a bring it to my attention...

The argument for taxing the rich more than the poor, as I've understood it, is that they have received more benefit from society. The specific example of going to a state funded college was brought up and how tax money is used to partially fund the state colleges. I was simply pointing out that if a person goes to a private college, that doesn't receive aide from state coffers, the argument that they should be taxed more on their success because the state helped them achieve that success loses it's point. And what about those who never go to college, should they be taxed more because they consumed more state resources?

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Originally Posted by Texas Proud My point was that anybody who says they got where they are today with only their hard work and nothing from anybody else is just wrong... that is what I was trying to point out...

I was actually having this discussion with my kid the other day. I agree that people don't become successful by themselves. That does not mean they use state funded programs or resources provided to society more than the poor to become successful. Why should the state be able to confiscate more of their money because they were able to grab their bootstraps and make themselves successful without consuming more state resources?

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Originally Posted by Texas Proud What others were trying to say (and I am not anywhere near a fan of this argument) is that because of the US system, your hard work can pay off handsomely and THAT is why you should pay more taxes.... to support that system....

That is not how I've been understanding the argument. I've understood it as the rich benefit more from the government's resources so they should be made to pay for more of those resources.



ERD--I am in a position where my pay is a bit below one of the tax increase cutoffs. Just about everyone I work with is in the same boat. We all know how much O/T we can work before we start to see diminishing returns. We have the good fortune to be able to turn down O/T jobs and once we hit the point where our taxes go up we shut off the O/T spigot. The general consensus is it makes no sense to work an extra 6 hours O/T when we will only see pay for 2-3 hours work because we worked too much O/T. The extra money is not worth our time once we hit that point because of the tax increase. Granted this is only local, but I personally know of approximately 30 people who stop working after they hit a specific earning point, solely because the tax increase means we work just as hard and long for less take home pay. Kind of like the simplistic military retirement pay issue, where people see that they are working for half pay if they stay in the military passed 20 years.

[Nords]

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Originally Posted by lets-retire Kind of like the simplistic military retirement pay issue, where people see that they are working for half pay if they stay in the military passed 20 years.

After 20 years, it's usually not about the money anymore...

[lets-retire]

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Originally Posted by Nords After 20 years, it's usually not about the money anymore...

That wasn't the point I was making. The point I was making is since the military member is eligible for retirement (@ 50% base pay) they essentially are working for about half pay (minus allowances) because the rest they get whether they are in the military or retired.

[Independent]

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Originally Posted by ERD50 This just continues to ignore the laws of supply demand. It may attract 'plenty' but it will attract less at lower effective compensation. How can that not cause 'any harm'? We had 'plenty' of gasoline at $4.00/gallon, but it slowed the economy. I'm sorry, but it's hard to discuss this sensibly if one continues to ignore the effects of that. Apparently. But it's tough since the bolded sections seem to contradict each other. And it's getting too long to go back through all the old posts to reconstruct, so how about you concisely restate what it is you are trying to say with regard to the tax proposals? I'll restate mine: Spreading any tax increases across all taxpayers is likely to get them voting for more sensible government policies and reduced spending, since the spending affects them more directly. The 'rich' already pay a very high % of FIT, with the lower 50% of filers paying very little. I won't take it at face value that the 'rich' have more influence on political policies, there are big voting blocks of non-rich with plenty of power. I'd give examples, but it would drive this further into political hot territory. -ERD50

I tend to write awfully long posts, and then still get in trouble because I didn't write the extra words.

I should have said "I don't think progressive taxes do any more harm to the economy than flat taxes." Does that reconcile the contradiction?

My first example was the impact on consumption, partially because our current economic problem isn't lack of productivity or lack of capacity but lack of customers.

But then I also talked about managers and capital, which I agree are more likely to come from the higher income end. I understand that managers have special skills, but plumbers have special skills too. $x of taxes collected from plumbers will do as much damage as $x of taxes collected from managers. The capital situation is more complex. I understand there's an economic theory related to high wealth people and capital, but I think the last 30 years have badly damaged that theory. I'd say letting middle income people keep $y of earnings will provide as much benefit from capital accumulation as letting high income people keep $y.

The above is an economic discussion. You seem to be more interested in the political science perspective. You think that if we fully funded government spending with a flat tax we'd have better spending decisions. I agree. But I also think we'd make essentially the same progress if we fully funded spending with progressive taxes. Anything that visibly puts the full cost of gov't on the voters will change votes. I happen to go further and think we'd make even more progress if we set taxes/spending by annual referendum, but that's another thread.

[haha]

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Originally Posted by myself Personally, I think that the fundamental reason for the child tax credits is that they will more than make up for the money that the parents would pay if the credit wasn't available. After all, don't they want more people to fund the gov't coffers.

A more fundamental reason is that society winds down without homegrown children. If you don't believe this, just manage to live another 50 years or so and you will see.

Ha

[haha]

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Originally Posted by NW-Bound And back to the education discussion... Let's not talk about how useful or practical the study of French literature is. I want to ask what the cost of that study should be. How much does it cost to purchase some old classics, and to hire a good professor, whose lectures can now be shared via video? As with any public endeavor, we should ask how we can achieve the same result by spending more wisely, and not just by throwing more money at the problem.

Excellent point. Get a quality set of language DVDs, software or audios. Master the accent. Go to France. Teach a little English, read your Flaubert and Verlaine, have a tremendous amount of fun, go to a few free lectures, get in on some pillow tutoring. Return home, much better qualified in French literature than the hapless US French major who was mostly taught by someone named Johnson and was bored stiff.

Ha

[ERD50]

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Originally Posted by Independent I tend to write awfully long posts, and then still get in trouble because I didn't write the extra words.

heh-heh - I feel your pain! Seems whenever I make an effort to be concise, I leave a hole for misunderstanding, then the explanation is longer than what I may have written in the first place (but maybe no one would read due to length). We can't win for losin'

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I should have said "I don't think progressive taxes do any more harm to the economy than flat taxes." Does that reconcile the contradiction?

Yes, thanks - that does help and I would actually lean more towards your view - that progressive taxes (in general, and if modest enough), actually do less harm than flat taxes. My objection to the current system isn't that it is progressive (I think it should be), but that ~ 50% pay such little in FIT. It's the shape of the curve that bothers me (lingering near zero for half the filers, than a slope up), not so much the overall end-to-end slope. In fact, if we simplified the tax code to make this meaningful, I could support modest increases in the top marginal brackets as you get to the very, very rich. Something tells me that a guy isn't bustin' his butt to make $110M instead of $100M because he 'needs' the money. It's a game at that point. And I don't think modest increases would do much to de-motivate that game. Now, maybe at the $5M level, a guy really is pushing to do more to grow a small business into a bigger one. I think we could have a gentle slope all the way up the range. Use a formula instead of brackets.

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The above is an economic discussion. You seem to be more interested in the political science perspective. You think that if we fully funded government spending with a flat tax we'd have better spending decisions. I agree.

It's some of both. I suspect there is more multiplier effect in money invested in businesses, but I don't have the data to back it up, and has been said, not all money from the 'rich' goes back into investments in job growth. Some is consumed, and that's probably no different than the same amount of consumption spread over a larger group.

Related to all this, it sure would be a tough road at this juncture to get our tax revenues to match our spending (even with some real cuts in spending). No matter who we tax for it, it's going to be a drag on the economy and that isn't going to get support from many in the state we are in. But it might actually be the least painful medicine in the long run.We have to deal with this spending/revenue gap sometime, and I fail to see how it will get easier later than sooner. Bitter medicine though.


Hey, are we agreeing too much? Is it time to throw in some name-calling and get this thread closed?

-ERD50

[haha]

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Originally Posted by ERD50 Hey, are we agreeing too much? Is it time to throw in some name-calling and get this thread closed? -ERD50

I think it has been a very long time since there was any name calling here. It was fun, but it led to unfortunate thread closures, poster departures, etc., etc.

Ha

[Westernskies]

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Originally Posted by haha I think it has been a very long time since there was any name calling here. It was fun, but it led to unfortunate thread closures, poster departures, etc., etc. Ha

..although I do see one member here refers to himself as a moron...

[jdw_fire]

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Originally Posted by lets-retire Quote: Originally Posted by Texas Proud What others were trying to say (and I am not anywhere near a fan of this argument) is that because of the US system, your hard work can pay off handsomely and THAT is why you should pay more taxes.... to support that system.... That is not how I've been understanding the argument. I've understood it as the rich benefit more from the government's resources so they should be made to pay for more of those resources.

well what texas proud said is close to the point i was making and it appears that it was in response to my posts that people felt the need to defend that they had been solely responsible for their own success because either they hadnt gotten any direct financial help from the government or had just taken advantage of government programs/subsidies that were available to everyone. that defense was led using the example of state schools and progressed to people taking full credit for their own success due to their own hard work and good decision making. but it showed their apparent total blindness to how much their income depends on them living in this great country whether or not they got some sort of payment from the government.

i made the assertion that their (everyones) income IS a benefit of living in this country (or whatever country they live in). given that assertion is true it follows that people who have a higher income have received a higher benefit and should therefore have a greater responsibility to pay for the continued operation of this country (whether this operation includes every thing it includes now or is changed. i was not talking about how the tax dollars were to be spent, just collected).

i also pointed out that the value of the last dollar earned/spent is less to a person who has a high income/wealth when compared to someone with a lower income/wealth so therefore high income people were paying their taxes with less valuable dollars than their lower income counterparts. this implies that the higher income people are in a position to pay taxes at a higher tax rate while not giving up any more value/utility than the lower income people give up when they pay their taxes albeit at a lower rate.

these two points easily and logically lead to an income tax code that has higher marginal tax rates on higher levels of income and i was saying that i think more of these "higher marginal tax rates" are appropriate on even higher levels of income than are in the current code since we are in such great debt and need more revenue.

[Westernskies]

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Originally Posted by jdw_fire ...since we are in such great debt and need more revenue.

Sorry to break the news to you, but-of control spending and a lack of accountability for the taxes we already collect is what got us all into this such great debt. Your tax- and-spend entitlement mentality is only going to make it worse. Half our population doesn't pay any federal income taxes to support the services we all receive. This isn't sustainable. Expecting a very small percentage of our population to pick up the entire tab for the majority is not realistic. Enough is enough! We need to stop spending and expect everyone to participate in the economic recovery; more revenue coming in and less spending going out on failed social progams and earmarked pork-barrel spending bills. We already have a progressive tax code, we don't need a punitive one.

id like to beleve I didnt misquote you this time

[zinger1457]

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Originally Posted by ERD50 My objection to the current system isn't that it is progressive (I think it should be), but that ~ 50% pay such little in FIT. -ERD50

I agree that 50% is totally out of whack. The Bush tax cuts didn't only benefit the wealthy although they definitely received the largest chunk, it also caused an estimated 5 million people to be dropped from the tax rolls. Now if they had only attacked spending cuts with the same gusto. What may be more disturbing is that 10% of taxpayers actually make money off of federal taxes, they get more back from credits and refunds then they paid in.

[M Paquette]

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Originally Posted by Westernskies Sorry to break the news to you, but-of control spending and a lack of accountability for the taxes we already collect is what got us all into this such great debt. Your tax- and-spend entitlement mentality is only going to make it worse. Half our population doesn't pay any federal income taxes to support the services we all receive. This isn't sustainable. Expecting a very small percentage of our population to pick up the entire tab for the majority is not realistic. Enough is enough! We need to stop spending and expect everyone to participate in the economic recovery; more revenue coming in and less spending going out on failed social progams and earmarked pork-barrel spending bills. We already have a progressive tax code, we don't need a punitive one.

Alas, our professional political class gives us two choices:
1) Tax and spend
2) Borrow and spend.

Neither is a very good option, and the first ends tragically, while the second tends to end horribly.

Hey, anybody remember back in the distant past, before the last election, when all those TV ads pledging fiscal responsibility were running? I'm really looking forward to hearing more of that in 2012.

[jdw_fire]

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Originally Posted by Westernskies ... Your tax- and-spend entitlement mentality is only going to make it worse. ... id like to beleve I didnt misquote you this time

well 1st i dont have a "tax and spend entitlement mentality" (i guess you dont get what you'd "like to believe"), so please stop accusing me of such. i have a mentality that "we the people" need to pay for the government we have. by all means ( and if you would go back and look i said something like this multiple times) we need to cut spending. i think our government spends on things it shouldnt. but i also think we need to collect enough revenue to cover what we are spending on and now pay down the debt too. as i have said multiple times in this discussion (please read it this time) i am talking about how to collect that revenue. i believe this is the appropriote way to collect the revenue needed to run this country, no matter how much it costs to run it.

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Originally Posted by Westernskies Sorry to break the news to you, but-of control spending and a lack of accountability for the taxes we already collect is what got us all into this such great debt. ... We need to stop spending and expect everyone to participate in the economic recovery; more revenue coming in and less spending going out on failed social progams and earmarked pork-barrel spending bills.

just because we got in such debt by "out-of control spending and a lack of accountability for the taxes we already collect " doesnt mean we dont have that debt. i think it is way too large and needs to be reduced if not eliminated and that wont come close to being done with spending cuts alone, hence the discussion on how to collect those additional taxes necessary to get the budget in a surplus position.

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Originally Posted by Westernskies ... Half our population doesn't pay any federal income taxes to support the services we all receive. This isn't sustainable. Expecting a very small percentage of our population to pick up the entire tab for the majority is not realistic. Enough is enough! ...

you are wrong about "half our population doesn't pay any federal" "taxes to support the services we all receive". most people who have low incomes get said income via wages and they therefore pay federal taxes (FICA) that directly "support the services we all receive" (SS is a huge part of our national spending). and guess what, these low income earners pay a larger percentage of their income to FICA than high income (>$150k/yr) people do.

a little aside: it is interesting that when there is a discussion about the SS trust fund on this board the majority of the posters say there isnt 1, they say that money has already been spent on running the government. well if that is the proper position then the FICA these low income people paid goes to cover other fed spending also.

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Originally Posted by Westernskies We already have a progressive tax code, we don't need a punitive one.

we are a very long way away from having a punitive tax code for the high income people and my suggestions wouldnt make it one