Tax Policy Debate: Raising Rates Versus Limiting Deductions
http://thedianerehmshow.org/shows/2012-11-20/tax-policy-debate-raising-rates-versus-limiting-deductions
January 1st, 2013, is just six weeks away and that’s the day tax rates are scheduled to jump and federal spending slashed, a prospect so dire it’s called the “fiscal cliff.” The biggest immediate obstacle to a deal to avoid that fate is the debate over taxes: President Obama vows to raise tax rates for the wealthy. Congressional Republicans oppose higher rates but say they could agree to curbing deductions and closing loopholes. Negotiations between now and year end are likely the opening skirmishes in much longer and larger efforts to overhaul the tax code. Please join us to talk about tax rates, tax deductions and the policy debate ahead.
Guests
David Wessel
economics editor for The Wall Street Journal and author of "Red Ink: Inside the High-Stakes Politics of the Federal Budget."
Roberton Williams
principal research associate at the Tax Policy Center, a joint venture of the Urban Institute and the Brookings Institution.
Rachel Smolkin
White House editor for Politico.
Comments
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While our T-Party Governor, "John the Flim Flam Man Kasich" is busy doling out our State`s Tax dollars to his billionaire friends,let me warn you of how "SMALL GOVERNMENT " works.They confiscate revenue designated for City or local use. They sell your lottery,prisons,turnpikes,State parks.They pass out these tax dollars to their campaign donors.TAXPAYERS ARE LEFT SCREWED!
The powerful take your tax dollars,and tell you if you really want cops,fire,911,teachers,snow plows,and your pot holes repaired,you`ll have to increase your own local tax to refill the void left by the theft.
I don`t have hidden foreign or offshore accounts.All I have is my 1 wallet. Ya can`t fool me by the T-Party shell game,or re-naming a tax a FEE!
The "Flim Flam Man" gave $8 million of our tax bucks and gave it to a restaurant owner campaign contributor. They used the bucks to remodel a Texas plant,and relocated 125 Ohio jobs to Texas..........With friends like these who needs enemies?
Where is the Hostess story? You cannot find a better example of what is going to happen in our country in regards to labor unions and limited funds, public and private.
Partisan:
Yes, where is the Hostess Story:
Even as it blamed unions for the bankruptcy and the 18,500 job losses that will ensue, Hostess already gave its executives pay raises earlier this year. The salary of the company’s chief executive tripled from $750,000 to roughly $2.5 million, and at least nine other executives received pay raises ranging from $90,000 to $400,000. Those raises came just months after Hostess originally filed for bankruptcy earlier this year.
This is what is wrong with American manufacturing and jobs. Management is run by thieves. A company that is floundering and what does it do, rewards those at the top.
Any wonder that capitalism is a failure.
Something interesting that seems to have taken hold, a new democrat party talking point. The notion that any business that cannot hold up under the burden of Obamacare, taxes, regulations and union legacy costs has a "failed business model" and should go out of business. These comments are always associated with companies or small businesses that complain about Obamacare and unions FYI. Certainly a truly failing business model will indeed lead to liquidation, but this accepted attitude of goodbye and good riddance by democrats, is different and new.
Poor baby! It can't get it's Twinkies anymore. WAAAAAAAAAAA!
Limiting tax deductions is so simple that the powers that be will not buy into it. Imagine a 1 page change to the tax code and how many of the current 70,000 pages would be eliminated.
No, it may not be perfect, but it is doable - and therefore it will NOT be done.
(And as for the charitable deduction: in my opinion it "ain't" charity is you want something/a deduction in return - I call that a "quid pro quo.")
Voters said NO to paying for our "Ports and Harbors" tax hike here. This was once a duty of the U.S. Army Corp of Engineers.The job of maintaining our nations ports. Now with "Small Government" locals citizens get to pay the feds for this job,then pay again for actually getting the job done.
With all the T-Party ranting and raving with their attacks on Obama,average Americans don`t notice what the T-Party is up to. SHAMEFUL !!!
Small government is a myth. Governments are being forced to sell non-core cash flows to fund ever-increasing pension benefits expenditures. Pension costs in Illinois represented 6% of 2008's budget and then 16% in 2011. Unsustainable!
Who represents the taxpayers (the 53%) in Washington?
In return for significant spending cuts, I would offer limiting of deductions. Let's start with charitable deductions.
David, let's learn the lesson from Spain. Just because we can borrow at low rate now doesn't mean that can't change quickly.
The T-Party advocates say raising taxes on the rich won`t solve all of our problems ????
But ending "Big Bird' will ????
A husband and wife who makes $250,000 where the income comes from wages and is reported on W-2s and who lives in a big city like New York, Washington, Boston, and San Francisco is paying a hefty amount in taxes. These hard workers are not in the same category as wealthy people who pay only 16 percent in income taxes on their investments, but are on the contrary paying upwards of 31 percent in income tax alone not even including payroll taxes. They are hit with the alternative minimum tax, get no tuition breaks, have high housing costs, and often pay city taxes and property taxes in addition to income taxes and payroll taxes. To say that they’re not paying their fair share, and including these wage earners who pay high taxes with the likes of the Buffets, Gates, Obamas, and Romneys of the world, is maddening and misleading to Americans.
It always astounds and annoys me that, whenever we discuss taxes, including your discussion today, we only talk about the federal personal income tax. The truth is the federal income tax accounts for only about 30% of all taxes collected in this country.
When you add in social securtity taxes, state taxes, property taxes, sales taxes, gas taxes, and even indirect taxes, like corporate taxes: a minimum wage worker can easity pay over 30% of her wages in total taxes. By the same calculation Warren Buffett or Mitt Romney pay only about 15% of their investment income and gains in total taxes.
If we want to fix our tax system, we need to start by looking at all these different taxes we pay. There’s a good website that goes over all these calculations. It’s called FairShareTaxes.org.
Do check out this week's The Economist.
A table on page 28, regarding the piece called "Opening Bids" gives a nice breakdown of the $ that could be raised.
Taxing dividends and capital gains as ordinary income, limiting deductions, and lowering the estate tax (which was pushed by Obama by the way) sure looks like interesting low hanging fruit.
And oh - wish the phrase "fiscal cliff" would be expunged and replaced by fiscal "slope" or some such phrase.
"Grover Norquist choke hold" A contract between the voters and the politician that they put into office to not raise taxes in an effort to limit the growth of government is a choke hold? It's the tax payer that is put in a choke hold by federal and local governments with out of control spending, the voter is fighting it the only way they can.
partisan politics wrote: "Grover Norquist choke hold" A contract between the voters and the politician that they put into office to not raise taxes in an effort to limit the growth of government is a choke hold? It's the tax payer that is put in a choke hold by federal and local governments with out of control spending, the voter is fighting it the only way they can."
Really pp? So you're saying that Grover Norquist is essentially representing taxpayers? Which taxpayers because he certainly does not represent me as a voter. That Grover Norquist pledge has done more harm than good.
Vet bets 10K he has solution. www.TheJobsMandate.org
If our tax system, both Federal and State, was truly designed to raise operating income it would be very simple. Instead, social engineering and supporter payback has created the current tax system mess. I see no interest in changing from either major party.
This show is typical of how poorly we are served by our media, long term unfunded liabilities on promises made by both the federal and local governments reach dollar numbers that most cannot fathom. Yet they trifle over the lies we are constantly fed by our government.
By the way the most insidious tax on all of us that never gets covered is inflation, caused largely by the creation of new money printed by the federal government that makes all of our money worth less. That emotional caller nailed it, BRAVO!
Here is that evil Norquist pledge. It did not copy and paste well, but here's the link if you want to see it in it's original form.
Taxpayer Protection Pledge
I, _______________, pledge to the taxpayers of the _____ district
of the state of__________, and to the American people that I will:
ONE, oppose any and all efforts to increase the marginal income tax
rates for individuals and/or businesses; and
TWO, oppose any net reduction or elimination of deductions and
credits, unless matched dollar for dollar by further reducing tax rates.
________________________________
http://www.atr.org/userfiles/Congressional_pledge(1).pdf
Corporations, the very wealthy, big Pharma, and the Department of Defense have been doing extremely well over the past few decades.
The average worker’s take-home pay and retirement prospects have declined over this same period.
Why do “entitlements”, upon which so many of us depend to some extent, come under the axe under the guise of “compromise”?
"Compromise" should only mean that it’s now time for the top beneficiaries to bear more of the load.
partisan politics wrote:
Here is that evil Norquist pledge. It did not copy and paste well, but here's the link if you want to see it in it's original form.
Taxpayer Protection Pledge
I, _______________, pledge to the taxpayers of the _____ district
of the state of__________, and to the American people that I will:
ONE, oppose any and all efforts to increase the marginal income tax
rates for individuals and/or businesses; and
TWO, oppose any net reduction or elimination of deductions and
credits, unless matched dollar for dollar by further reducing tax rates.
________________________________
Translation: No change, no way, no how.
Why don't we increase the tax rate on derivatives and high frequency trading. These activities offer nothing to our real economy and is actually destabilizing. The derivative markets does 700 trillion dollars a year in business. A ten % tax would really help and might slow some of this counter productive activity. I hear they recently put a very very small tax on derivatives but come on. Can't we step past the financial corporations for once.
Mike Sergeant wrote: "Translation: No change, no way, no how."
That is what I hear from the federal government. Considering tax dollars from the present and the future are the life blood of the FG, the pledge is a logical approach.
Milton Friedman
I am in favor of cutting taxes under any circumstances and for any excuse, for any reason, whenever it's possible. The reason I am is because I believe the big problem is not taxes, the big problem is spending. The question is, "How do you hold down government spending?" Government spending now amounts to close to 40% of national income not counting indirect spending through regulation and the like. If you include that, you get up to roughly half. The real danger we face is that number will creep up and up and up. The only effective way I think to hold it down, is to hold down the amount of income the government has. The way to do that is to cut taxes.
partisan politics wrote:
The only effective way I think to hold it down, is to hold down the amount of income the government has. The way to do that is to cut taxes.
The massive deficit and debt proves that this statement is patently false. Politicians will, and do, borrow the money to pay for their pet programs.
" partisan politics wrote:
Milton Friedman
I am in favor of cutting taxes under any circumstances and for any excuse, for any reason, whenever it's possible. The reason I am is because I believe the big problem is not taxes, the big problem is spending. The question is, "How do you hold down government spending?" ..."
You are quoting one of my favorite economists (together with Keynes). Incidentally, as an aside, there is no contradiction in this appreciation... In any case, there is one essential caveat in your quote: "whenever it's possible."
The Bush/Cheney administration believed that it was time to cut taxes (fine!) and then proceeded to spend without even remotely attempting to generate revenues to cover the cost of their domestic and foreign policy choices. This was one of the situations where cutting taxes proved "not possible."
I agree wholeheartedly that citizens and their governmental institutions must delineate between expenditures that are truly the governments' responsibilities and the other expenditures that are not.
This is the nature of the current dilemma here, in the US, and elsewhere as well. This is a debate that honest conversations could resolve (emphasis on "honest").
In my opinion, infrastructure, fundamental research, education, social programs (public health policy, the social safety net for the underprivileged), national defense are part of the government's responsibilities... All of this within reason, of course... The boundaries of these responsibilities must be debated, honestly!
Mike Sergeant wrote: "The massive deficit and debt proves that this statement is patently false. Politicians will, and do, borrow the money to pay for their pet programs."
"False"? you can't know that with any certainty. Europe has shown that the acceptance of much higher taxes on everyone did nothing to help long term prospects. We can only imagine where we might be right now if there was not a traditional American aversion for tax increases.
Equitable, a Tax Perspective
I hope all listening to the ex-military dentist moan & groan about tax increases preventing him from opening his Third dental clinic in California also heard his comment that he needs no mortgage interest deduction on his home (because he pays no mortgage?).
Now, consider that the majority of people who are able to buy homes in today's lending market are an eleite group of the already-proseperous, who, in the downturn market, are now getting even more prosperous by buying up the discounted homes the poorer people lost. End result? Increased wealth for the wealthy as they become landlords to those whose lost their homes. In fact the wealthy will win-win, again, when they later sell their investment properties for a profit, after they drive the prices up. And this is how the poorer people among us, the 98%, are lose-lose-losing. Again.
It sure sounds like the successful dentist-businessman lamenting possible effects of a tax increase has not given a single thought to the perspective of poorer Americans. And, his is the same message we hear often from others who live in this well-to-do stratosphere, a group which, incidently, includes many of our congressmen. All things considered, Equitable is the word which comes to mind.
"partisan politics wrote:
Mike Sergeant wrote: "The massive deficit and debt proves that this statement is patently false. Politicians will, and do, borrow the money to pay for their pet programs."
"False"? you can't know that with any certainty. Europe has shown that the acceptance of much higher taxes on everyone did nothing to help long term prospects. We can only imagine where we might be right now if there was not a traditional American aversion for tax increases."
In this particular instance, your European example is not valid.
There are some countries with high tax rates that are doing very well, some with high tax rates that are not doing well, and some with lower tax rates that are not doing well either...
" C B Stranaghan wrote:
Equitable, a Tax Perspective
... "
Equitable: equity is an essential concept in fiscal law.
I agree!
You can't have open borders and a welfare state.
Why do people always point to China as a majority holder of the US debt, when they own less than 7%? We, the taxpayers own the majority of the debt, it has been "borrowed" from the Social Security Trust Fund!