Not true. Not even close. The TARP money and the stimulus money was accounted for in 2009, which resulted in a deficit of 1.4 trillion dollars. The 2010 budget was supposed to have a deficit of 1.1 trillion, but they overshot the mark, and is now expected to be about 1.35 trillion. At one point, the estimate was 1.6 trillion, but it’s come back a bit.
Next year’s deficit is projected to still be about 1.3 trillion dollars. That’s the Obama administration’s estimate, anyway. Any bets the final amount will be higher?
The lowest the deficit is projected to get is 706 billion dollars in 2014. And that assumes a repeal of all the Bush tax cuts, and a 500 billion dollar clawback in Medicare Benefits. Even if that is managed (don’t hold your breath), the deficit is forecast to begin rising again due to the increased retirement of the baby boomers and rising health care costs. It will be back over a trillion dollars by the end of the decade.
After that it gets REALLY bad.
You can look at the data yourself - here are the summary tables for the 2011 budget.
If you look at it, you’ll see a big drop in the deficit in 2012, from 1.3 trillion to 830 billion. That’s the result of the Bush tax cuts expiring. But Obama is already saying he’s thinking about extending the portion of those cuts that apply to the middle class. So expect these numbers to wind up being worse. If not, consider that the deficit will still be over a trillion dollars in 2020, after a large tax increase.
You seem to think these are different people. Tell me: Who are the people who are ‘capturing the most value from production’ without actually helping produce? Other than politicians, that is.
And I’d disagree with you - to the extent that people are paid based on such things as the rarity of their talent and how many people they affect. A smart venture capitalist with a good eye for the qualities that make up a valuable start-up can be indirectly responsible for the creation of billions of dollars in real value. Jack Welch saved GE from becoming an old-world industrial dinosaur like Zenith or Philco or Bethlehem steel, and turned it into a profitable, modern multinational corporation. Steve Jobs rescued Apple from oblivion. How much are these people worth to society?
As for investment bankers - good ones are worth their weight in gold. Don’t believe the stereotypes.
And an American laborer’s wage is not solely because of his labor, but because he is the beneficiary of millions of dollars of capital invested and risked to magnify his productivity. Both sides win from that arrangement.
I sure have, sparky. Thanks for asking. My old copy of “Principles of Modern Macroeconomics” is sitting in my bookshelf as we speak.
Yeah yeah. One of Mankiw’s self-referencing principles. People respond to incentives.
I don’t know why you’re saying this, because I never said that money paid == productivity.
So you want to tax the rich more, but keep them in the country by ‘training them to stay through patriotism’? That sounds a little too fascist for me, thanks.
I assume by ‘positive inducements’ you don’t mean actually allowing them to keep what they earn. So what are you talking about?
I have a radical idea - instead of taking their money, then brainwashing them or bribing them to stay by offering them goodies in return, how about just leaving them alone?
And thanks for the unnecessary cheap shot at Alberta. A strange one it is, since we have just as much Democracy as you do. I have no idea what you mean by that.
I have no idea what you’re saying here. Leaving people their own ends, and leaving them with their own money is not ‘indifference’. It’s respect for their right to self-determination. A right I care about quite strongly.
Then you’ve got nothing to worry about from globalization and outsourcing, right? Good to hear that you’re not one of the ones who complains about multinational corporations moving offices abroad or opening factories in other countries.
I didn’t say where ‘money’ comes from. I said wealth. They are not the same thing. Ask the Argentinians, or the former residents of Weimar Germany.
I repeat: Once you get past all the high finance, in the end the wealth of a country is determined by its material goods. resources, and its ability to provide the goods and services the population wants and needs. You get into a lot of trouble when you ignore this basic fact and start thinking about creating wealth through the manipulation of currency and other fiscal shenanigans.
Ultimately, a healthy economy is one in which capital flows where it does the most good in terms of creating those goods and services. You can dick around with it for a while, or sometimes even do some good when the flow of money becomes broken, but in the long run, such meddling will cause misallocations of capital, which will cause a decline in overall productivity.
I don’t follow. Could you explain further? How are the rich being subsidized by workers?
Whoa. Who says? And why should they be? Don’t you think a citizenry in which everyone pays part of the cost of government is a better idea than one in which half the citizens are free-riding?
Man, you’re making some wild leaps here. How exactly do low taxes result in productive people winding up in debtor’s prison? As for smaller government being more corrupt - have you heard the phrase ‘power corrupts’? I can think of nothing more susceptible to corruption than a large, central government. Past history would suggest I’m right.
That said, I’m not advocating a flat tax. I don’t mind a progressive tax system. But I’m keenly aware of the distortionary and growth-limiting effects of a steeply graduated tax system with high marginal rates.
Anyway, I think you’re approaching the problem backwards. Liberals seem to think like this: “Look at all the wealth those rich people have! They shouldn’t be allowed to keep all of it! If only they were taxed at a ‘fair’ rate, think of what we could do with all the money!”
I approach taxation from the other side. I think about what the proper form of government is, and what the proper size of government is. Then I think about how much tax is required to pay for it. Then I look for a tax system that raises the necessary income with the smallest impact on the economy. My interest isn’t in confiscating the rich’s money just because they’re rich. My interest is in raising the money we need for the things we need to do. If I find that the things we want to do cost so much that taxes would be punitive, then I start thinking about what we can do without from government.
My gut feeling, backed by a lot of evidence from countries around the world, is that a government that is about 30% of GDP in size, and taxes that are at about the level they are in the U.S. is just about right. If the U.S. government downsized a bit, things would be fine with current levels of taxation.
I also think that the simpler the tax is, the better. I’d get rid of all the business loopholes and tax perks, and drop the business tax rate to 15%.
I also believe that all citizens should share in the cost of policies they vote for. So I’d add a VAT to pay for the deficit, and tie the size of the VAT to the size of the deficit. So if a politician proposes a program, everyone would think, “Well, I guess my VAT will have to go up to pay for it.” Rational decision-making means paying the costs as well as reaping the benefits.
Oh, so you’re trying to promote even less saving? Wealth taxes are a horrible idea. They punish people for being frugal. They punish small business owners or any sole proprietorship. They punish people for saving money for their kid’s future.
Because the alternative of allowing people just live their own lives is just too horrible for some people to contemplate.
It’s not that progressive tax brackets aren’t the only thing making our tax laws complex, it’s that they have nothing to do with the complexity at all. I gave you about six examples of different sorts of expenses that probably need to be made deductions and you picked one. Do you agree that expenses need to be deducted from revenue to come up with income? Have you thought about depreciation works in your scheme, or how we judge what income from a multi-national corporation is subject to tax in the US, or how stock options are handled, or anything other than paying a set percentage of wages? If all you have is wages then our current tax code is dead simple.
It is completely disingenuous to argue for a flat tax based on simplicity. Just admit that you want to lower taxes on the rich and raise them for the majority of the country.
Sorry, slip of the fingers. The tax cuts are scheduled to expire. Obama is hinting that he may renew the tax cuts on the middle class.
No need for accusations of dishonesty, by the way. Do you think anyone cares whether they’re being ‘repealed’ or expire in the context of my messages? I can’t even imagine what you thought I was hoping to achieve by being dishonest in that characterization. It was an honest slip.
Conservatives seem to make a lot of little slips with facts. Funny how they say that Obama has raised taxes, and that he signed the bank bailouts, and that the UHC bill had death panels.
I didn’t really answer your question. By using “assumes a repeal” you change the scenario. It would be an assumption to think that congress would actively repeal an existing law. On the other hand, if congress does nothing (which they seem to do well) then the tax cuts will expire by themselves. It would be difficult to avoid a filibuster if the Democrats tried to repeal the tax cuts. On the other hand, it will be difficult to come up with a filibuster-proof majority to actively keep them in place.
I’m aware of the difference. It was just a slip of terminology. You’re not only trying to make a big deal out of a trivial thing, but accusations of lying are not permitted in GD and should not be made lightly in any event.
I guess that’s what you have to do if you don’t have good answers, huh? When in doubt, accuse the other guy of being a liar.
I agree that creating a set of guidelines to determine what is income is complex. Would you agree our current tax code is far more complex than it needs to be?
ONe of the links I posted is from the Heritage Foundation and addresses a lot of the points you’re making.
Yes, all of that has been thought about. The link shows a separation of wages income and business and capital income.
Years ago a man was telling me that his wife’s job drove them into a higher tax bracket which meant most of her additional income was eaten by the higher tax rate , making it impractical for her to work. Didn’t seem like a good system then and it doesn’t now.
That’s not what I want. It isn’t just it’s simplicity but the issue of fairness which is the subject of the OP. I’m open to being shown I’m mistaken but you haven’t accomplished that with “rough calculations” or references to current spending. Current spending has little to do with the question of what taxes are fair.
yes, it would be terrible if you were put in a higher tax bracket and all of a sudden all your previous income was taxed at a higher rate. That’s why marginal rates don’t work that way.
Are taxes more complex than they should be? Yes. If we got rid of special tax breaks like the oil depletion allowance that are used solely by high income earners we could lower taxes on the middle class. Let’s see, lower taxes on the middle class and raise more taxes from the wealthy. Didn’t we just elect someone that proposed that?
Funny though, that a flat rate tax would have the opposite effect.
Do you not yet understand that simplicity and flat tax have nothing to do with each other? Spending and the tax system have nothing to do with each other either. If you want to lower spending, lower spending. You don’t need to change the tax system to do that. What you propose will raise taxes on the middle class and lower taxes on the wealthy. Those are the facts. Whether it is “fair” or not is a judgement.
This would be a much clearer debate if you just said that you want to create a bracket-less tax system that shifts the tax burden to the middle class because you think rich people pay too much in taxes.
I’m trying to address the OP. If you’d rather not then stop responding to me.
If you want to explain how a flat tax with a high individual deduction and child deduction places higher taxes on the middle class I’m willing to listen. If you just assert facts without explanation I’m not interested.
As an example. Let’s say a man and wife , both working, with two kids earn 70,000 in wages. 15,000 in individual deductions and 5,000 each for the two kids means 40,000 is not taxable. If the tax rate is 20% they pay 6,000 in taxes.
Their uptown neighbor who earns 2 million gets exactly the same deductions and pays 392,000 in taxes. Can you explain how that is lowering taxes for the wealthy and raising them for the middle class other than just asserting it, and how a progressive tax is better?
If we kept it closer in income, the first family pays 6,000 in taxes and a family making 200,000 with the same structure pays 32,000. Those making more money are paying a lot more in taxes.
If you are going to make stuff up, why not have a million dollar exemption and a 1% tax rate?
The higher the exemption the higher the tax rate would need to be. In 2006, 80% of taxpayers paid total Federal taxes (not just income tax) at a rate less than 18%. The top 20% paid an average total tax rate of 27%, with the top 1% paying a total effective tax rate of 31%.
This is not rocket science: lowering the tax rates of the top earners will shift the tax burden towards the lower earners. Your 20% number is just a ridiculous number you pulled out of your hat.
It is a completely absurd number, as my figures show. Please show me your calculations. All the info is out there for the taking.
Your argument seems to be this: if we lowered taxes, then taxes would be lower. That’s called a tautology. Strangely, you seem to oppose a progressive tax system and then propose a progressive system by exempting a large amount of income.
But maybe I’m wrong and there is some shred of factual content behind your assertions. I’f love to be educated.
That’s probably more or less the ballpark of what the rich person is paying in income taxes. The scenario involving the middle class family would be a tax increase, and probably very sizable.
Newt Gingrich claims that the average family of four making $60 grand currently pays about $3,000 in income taxes.
Most notions of fairness and equity support at least some progressivity in the system. The most popular flat tax systems not only contemplate that there will be people that pay nothing, they contemplate that there will be people who get net tax disbursements. What your flat tax system would do is simply move the burden from the rich to the middle class.