What is so bad about the fiscal cliff?

[Budget_Player_Cadet]

@Shodan

I certainly agree that it would be better to do this with a selective rather than shotgun approach. But it would be better to do it with a shotgun than not at all. Democrats are never going to agree that now is a good time to cut spending, nor are Republicans going to agree that now is a good time to raise taxes.

No, it would be better to do this not at all. We’re in the middle of a demand-based recession; cutting more aggregate demand from the system is just going to lead to more economic downturn, and, you guessed it, less revenue. Which means that we’ll still be having this discussion, and the economy will remain awful. We should do this carefully, during a boom time, or both.

@Shodan

If spending cuts and tax increases were pleasant in the short term, they would have been done by now. They’re not, which is why we need them to happen automatically - because some people will always respond that ‘now is not a good time’.

What we need to do to fix our problems is going to hurt. The longer we wait, the worse it will be.

Er… No. Contractionary austerity will hurt more or less not just depending on how much there is to be done, but also how the economy is doing. Recovering nicely, with low unemployment and a real increase in private sector demand? It’ll hurt, but not that much. Up against the zero lower bound with very little demand present in an already awful economy? It’s going to hurt worse than a 12-incher in a sensitive spot. We can wait until the depression is over, and we should.

@XT

Hell, it took Germany (who ALSO did the whole ‘austerity’ thingy years ago, and who now has a pretty thriving economy) years before they got a return on investment.

Yes, they also simultaneously did several rounds of stimulus, and there were extraneous circumstances which make this situation quite different from other countries (like, for example, the whole “annexed a country considerably less prosperous and sustainable” thing).

@Zeriel

One also has to consider that austerity may be a better/the only viable choice when external constraints exist–for example, when you can’t float your currency to hold off the deleterious effects of a debt crisis because you’re locked into a single currency with people who aren’t experiencing the same levels of debt crisis and have no incentive to inflate the monetary base just to bail you out. Compare debt ratios and solvency between Japan and Greece, for example.

THIS. I hear a lot of republicans (not here, thank god, people here generally aren’t that dumb) screaming about how America is going Greece’s direction… But there’s so many things wrong with that comparison that it hurts.

@spactransient_gmail.com

First, let’s get one thing straight: The upper 1% (THE RICH) pay on average about 37% of all tax revenues while the upper 10% (THE WELL OFF) pay on average over 70% of all tax revenues. NO FREE RIDES!!! GOT THAT?? Stop expecting others to pay your share of taxes or pay for your wasteful spending habits.

…Should I even bother?

Probably not, but whatever.

http://www2.ucsc.edu/whorulesamerica/power/wealth.html

The top 1% in 2010 owned 35% of total net worth in the USA; they owned 42% of total financial wealth. The top 10% owned 77% of net worth and 86% of total financial wealth. So if anything, they’re getting taxed way too little. They apparently aren’t paying their fair share!

THE LONGER WE WAIT…
THE WORSE OUR LONG TERM FINANCIAL SITUATION IT WILL GET! :eek:

Yes, and if we do this right now, our short term economic situation becomes incredibly dire. In the long term, we’re all dead. In a country with the USA’s GDP, there are plenty of ways to deal with a gigantic deficit. It’s a matter of timing - we should not do this during a major recession. The right time to do this was… Um… Well, late 1990s (which Clinton did) and early 2000s (which instead saw massive deficits).

@ralph124c

Heck, we can just borrow more money, and print more money. If $5 trillion of stimulus was good, another $6 trillion should be even better..face it, the world is awash in cash..and foreign investors are eager to buy our bonds..so spend away.

$5 trillion of stimulus was good, it just wasn’t enough, and wasn’t focused enough. And foreign investors are eager to buy our bonds - the current interest rates on them are at record lows.

[septimus]

@LonghornDave

Why even bring up Warren Buffett’s name then? …
Also, most of Buffett’s income is not long-term capital gains or qualified dividends taxed at 15%; the vast majority of it is unrealized mark-to-market gains not subject to any taxes.

I don’t want to prolong this side-track, but your repetition of Buffett’s name and his income suggests discussion of him is important to you. So:

• No one is singling out Buffett’s income for attention. His name arose because of his claim that rich people in general (not just Buffett) pay a lower rate than their secretaries.

• In discussing “unrealized gains,” be aware that Buffett’s claim was about Form 1040 income which does not include unrealized gains. (If you do treat such gains as income then Buffett’s tax rate, instead of being lower than his secretary’s, would be much much lower.)

[Ravenman]

@LonghornDave

I have never seen Democrats make any meaningful specific proposal to cut entitlement spending. Perhaps you can point one out.

Let me just say I already know where this is going. I point out specific proposals, and you say they aren’t “meaningful.” It’s well known that Obama’s September 2011 debt reduction proposal included $580 billion in reductions to entitlements (cite), so you may commence your outrage that those cuts aren’t large enough for your taste. Nevertheless, Democrats have made entitlement reduction proposals, and I cannot explain to you why you were not aware of them.

I don’t give a shit what stupid thing Republicans were saying or are now saying. “Conservative” is a meaningless marketing label, so I will just assume that you mean Republicans when you say “conservatives”.

There’s no such thing as a conservative? Wow, lots of people call themselves conservatives but not Republicans. Perhaps you should write them all an email and tell them that they are Republicans.

I guess I’m confused. CBO estimates I have read put the 3.8% and 0.9% tax increases at $210 billion and act as the largest part of the funding mechanism for the entire PPACA law. Is that not a lot?

Calling out a 0.9% tax increase for HI as a “big tax increase” by grouping it in with a significant, but not “big”, tax increase is a great example of weasel-wording. The HI rate increase is expected to raise something closer to $80 billion over 10 years. That’s not a big tax increase.

[LonghornDave]

@jshore

But, most of that is due to the draconian spending cuts and the tax increases on the middle class. Almost none of it is due to the tax increases on the plutocrats. Allowing the tax cuts on the wealthy to rise back up to Clinton-era levels is not only the most painless way to cut the deficit in the sense of who it affects but is also about the least possible amount of economic hit you get for any combination of tax increases or spending cuts to enforce austerity (i.e., lower the deficit).

You are correct that most of the impact is not the increase on higher earners. I have seen the breakdown as something like the following.

0.3% Upper income Bush Tax Cuts
0.3% Unemployment Benefits
0.6% Spending Cuts
0.8% Payroll Tax Holiday
1.6% Lower and Middle income Bush Tax Cuts

Having said that, you can obviously see the problem though. The upper income tax cuts also won’t really make that big of an impact on the deficit. That plus some meaningless spending cuts doesn’t really make a dent in the fiscal problem of the U.S. We need to address this in a bigger way.

@jshore

(1) Social security is solvent for many years in the future and that solvency can be extended out much further by simple actions such as getting rid of the cap on income subject to the tax.

Seems simple to you and me, but why won’t they do anything about it? Congress could go a long way toward regaining some credibility if they would agree on a long-term Social Security fix.

@jshore

(2) Medicare is not what is unsustainable. The growth in medical costs as a whole is what is unsustainable. Just offloading those costs onto citizens does not make things more sustainable. In fact, the estimates are that health care costs for Americans would go up in net if the age for Medicare eligibility were to rise from 65 to 67. (This is presumably because Medicare is more cost-effective than private health insurance.) As that piece explains it, “Overall, according to independent assessments, the government would spend less on medical care, but the country as a whole would spend more, which is precisely the opposite of what public policy is supposed to be achieving right now.”

Sure, I’ll agree with you on that. Unfortunately we just passed major healthcare related (really just insurance) reform that did not to fix that problem and the Democrats seems to refuse to even acknowledge that the U.S. fiscal situation will be crushed by the massive unfunded liabilities associated with Medicare and Medicaid. What’s the solution from the Democratic Party? Seems to me that it is to shift the massive costs onto the young and the rich.

[LonghornDave]

@jshore

Come to think of it, that’s the interesting, no-brainer thing about the current situation: It is often claimed that there is a trade-off between equality and efficiency, i.e., you can have a fairer distribution or a larger pie for all but not both. And, surely, at some point that would become true. However, at the point that we are at currently, it is really a no trade-off issue: Increasing taxes on the wealthy is not only the fairest thing to do, it is also the best way to reduce the deficit without harming the economy. When the Republicans are saying that now is not the time to raise taxes on anyone, they are just blowing smoke: If they think it is not the time for austerity, then it is not the time for budget cuts either. It is simply not the time to worry about the deficit.

However, if you are going to worry about the deficit and enforce some measure of austerity then the way that seems likely to cause least pain to the economy is to raise taxes on the wealthy.

No. Just raising taxes on the wealthy does nothing. The best way is to reform entitlements. We need to stop the growth in Debt to GDP. The taxes on the wealthy will not come close to accomplishing that.

[Jas09]

@LonghornDave

Sure, I’ll agree with you on that. Unfortunately we just passed major healthcare related (really just insurance) reform that did not to fix that problem and the Democrats seems to refuse to even acknowledge that the U.S. fiscal situation will be crushed by the massive unfunded liabilities associated with Medicare and Medicaid. What’s the solution from the Democratic Party? Seems to me that it is to shift the massive costs onto the young and the rich.

The Democratic Party’s fix to rising medical costs IS Obamacare. IPAB, reduction in Medicare provider payments, and getting more young and healthy people into the insurance market is part of the plan. Some insurance companies are already moving to a fee-for-patient-outcome rather than fee-for-service. Others are trying different compensation approaches. Just about every large employer I’ve heard about is starting to require health assessments and wellness initiatives.

Give Obamacare some time - if private insurance exchanges and IPAB start to bend the cost curve then we can move from there. If not, then we try a different plan.

But saying that the Democrats don’t have a plan for health-care reform is rather belied by the fact that they not only proposed a plan but they passed it and are starting to implement it. You can claim the plan won’t work, but that’s different from saying they don’t even have a plan.

[LonghornDave]

@Chimera

Straw man since I said nothing about medicare or entitlements.

This is my mistake. I did not intend to make it sound like it was you. I said “you” in the general sense. Obviously including in the same post that I was responding to you would leave you to no other conclusion than that I was addressing it to you specifically.

@Chimera

I happen to believe they are getting out of hand, but I don’t buy the line that President Obama is doing nothing about them. His proposals have included cuts. True that they probably aren’t enough, but instead of negotiating in good faith and accepting some tax increases and asking for deeper cuts, the Republicans are playing stupid and consistently refusing to define exactly what cuts they want, what deductions they want eliminated. Throwing out numbers with no basis behind them is not a real proposal. It’s playing to their base while ignoring the “reality based” world around them.

They’re also flat out LYING by screaming about Obama’s cuts while denying the specifics of their own desired cuts. The whole reason they don’t want to specify that they DO want to slash Social Security and Medicare is because they want Obama to do it so they can continue to milk that lie to America.

I have a very simple response to this. Do you hold Democrats, which seems to be the party you support, to the standard set by Republicans, which you seem to have zero respect for? I would think you would want to hold them to a higher standard.

[LonghornDave]

@septimus

I don’t want to prolong this side-track, but your repetition of Buffett’s name and his income suggests discussion of him is important to you. So:

• No one is singling out Buffett’s income for attention. His name arose because of his claim that rich people in general (not just Buffett) pay a lower rate than their secretaries.

No, I think it came about because people like to throw out stupid talking points that they don’t understand. Buffett is not a good example of a wealthy person when you are defining wealthy to be everyone making more than $250,000; his secretary is not a good example of a middle class person when she makes more than $250,000. This bullshit is thrown out to confuse uninformed people.

@septimus

• In discussing “unrealized gains,” be aware that Buffett’s claim was about Form 1040 income which does not include unrealized gains. (If you do treat such gains as income then Buffett’s tax rate, instead of being lower than his secretary’s, would be much much lower.)

You are not getting it. The point is that the tax rate that Buffett pays on his realized income is misleading. He’s not some guy that makes a million dollars a year and can be compared to a bunch of lawyers and investment bankers. He is in a different stratosphere. No kidding that adding $50 billion of cumulative unrealized gains taxed at zero percent to the denominator would make the rate look even lower. No kidding that he is talking about is actual tax return and not some fantasy one that is based on a tax system that doesn’t exist. The point is that you cannot compare the rate that Buffett pays to anyone and expect that to mean anything. Comparisons are usually made when they are meaningful. I bet Buffett’s secretary pays a higher rate than your typical giraffe also; why don’t Democrats have that as the talking point about why middle class people are overburdened?

[Chimera]

@LonghornDave

I have a very simple response to this. Do you hold Democrats, which seems to be the party you support, to the standard set by Republicans, which you seem to have zero respect for? I would think you would want to hold them to a higher standard.

As someone who has voted Republican more often than Democrat, I hold the current incarnation of the party in utter contempt. As I have said repeatedly, it has become the Party of the Ignorant and the Insane.

Right now the Democrats are giving me most of what I want (politically and socially) or are closer to it than the Republicans. The only thing I’m really annoyed with is the inability to reign in spending, but as I have zero trust or respect for the Republican position and zero interest in pursuing their spending agenda, I have to live with the Dems as the best possible choice currently available.

[LonghornDave]

@Ravenman

Let me just say I already know where this is going. I point out specific proposals, and you say they aren’t “meaningful.” It’s well known that Obama’s September 2011 debt reduction proposal included $580 billion in reductions to entitlements (cite), so you may commence your outrage that those cuts aren’t large enough for your taste. Nevertheless, Democrats have made entitlement reduction proposals, and I cannot explain to you why you were not aware of them.

A proposal needs to come in the form of reform that will eliminate the long-term unfunded liabilities of social security, medicare, and medicaid. It isn’t that these aren’t meaningful; it is that they are meaningless. Even the Bowles Simpson plan would at least qualify as meaningful reform. Why wouldn’t Obama support that? I think we all know the reason is that he wanted to use up his political capital on passing “healthcare reform” that even Democrats don’t really like and went against what he himself campaigned on in 2008.

@Ravenman

There’s no such thing as a conservative? Wow, lots of people call themselves conservatives but not Republicans. Perhaps you should write them all an email and tell them that they are Republicans.

I am saying it is a meaningless label. Someone who calls themselves conservative could mean just about anything. Conservatism can be defined by anyone as anything. William Buckley defined it as follows.

It is the job of centralized government (in peacetime) to protect its citizens’ lives, liberty and property. All other activities of government tend to diminish freedom and hamper progress. The growth of government (the dominant social feature of this century) must be fought relentlessly. In this great social conflict of the era, we are, without reservations, on the libertarian side.

Based on this was Bush conservative? Was Rick Santorum? What about his near polar opposite, Ron Paul? How about you name a prominent Republican that fits this definition?

Since Conservativism means something different to everyone including people in the same party in the same country in the same year, maybe we could agree that it really doesn’t mean anything. When we’re talking about policies specifically promoted by the Republican party, it seems to make sense to call them Republican and not conservative.

@Ravenman

Calling out a 0.9% tax increase for HI as a “big tax increase” by grouping it in with a significant, but not “big”, tax increase is a great example of weasel-wording. The HI rate increase is expected to raise something closer to $80 billion over 10 years. That’s not a big tax increase.

This is just idiotic. Don’t you think I perhaps grouped them because they are both a part of the exact same law affecting the exact same people passed at the exact same time? What if their were 100 separate 0.1% increases in one bill, could I not lump them all together and call it significant?

[Ravenman]

@LonghornDave

A proposal needs to come in the form of reform that will eliminate the long-term unfunded liabilities of social security, medicare, and medicaid. It isn’t that these aren’t meaningful; it is that they are meaningless. Even the Bowles Simpson plan would at least qualify as meaningful reform. Why wouldn’t Obama support that? I think we all know the reason is that he wanted to use up his political capital on passing “healthcare reform” that even Democrats don’t really like and went against what he himself campaigned on in 2008.

Wow, I called it. Half a trillion dollars in spending cats isn’t just “not meaningful,” it’s “meaningless,” but $210 billion in tax increases is “big.”

This is just idiotic. Don’t you think I perhaps grouped them because they are both a part of the exact same law affecting the exact same people passed at the exact same time? What if their were 100 separate 0.1% increases in one bill, could I not lump them all together and call it significant?

Ok, you raise fair points. I still wouldn’t call a $210 billion tax increase “big,” because total government revenues over that time period are projected to be $41 trillion. Adding half a percent to that total is in no way, shape or form “big,” except to those who believe that every tax increase is big, and every spending cut proposed by a Democrat is meaningless.

[septimus]

I’m “turning over a new leaf” for coping with these threads. I’m asking the ignorant to examine this graph.
Your turn, LonghornDave. Click; examine; acknowledge or refute.

@LonghornDave

The upper income tax cuts also won’t really make that big of an impact on the deficit.

This foolish little talking point is very exasperating. The fallacy is almost too simple to bother explaining, but I’ll try an analogy:

Quarterback hands the ball to halfback who just stands still. “Why aren’t you running?”
“One step is less than a yard and won’t really make that big of an impact on the 80 yards we need.”

Most amusing is that the very same people spouting this nonsense would be toasting themselves triumphantly as “hard-decision fiscal conservatives” if they cut spending by sacrificing PBS.

Oh .. getting back to you, LonghornDave: Did you click the link above yet? (And, BTW, restoring Clinton-era tax rates does go a long way to gaining that 80 yards!)

@LonghornDave

No, I think it came about because people like to throw out stupid talking points that they don’t understand. Buffett is not a good example of a wealthy person when you are defining wealthy to be everyone making more than $250,000; his secretary is not a good example of a middle class person when she makes more than $250,000. This bullshit is thrown out to confuse uninformed people.

Almost every little “factoid” in this cute gibberish is wrong or confused:

[ul][li] “Buffett is not a good example” – Have trouble much with English? Buffett came up because of his quote, not his wealth.[/li][li] Buffett’s secretary earned $60,000 in the most recent year the salary is known. The meme that she makes more arose from idiots who estimated her salary from her tax without noting that Buffett’s comment included payroll taxes like SocSec.[/li][li] “stupid talking points that they don’t understand” – you’re right on this one, though not in the way you hoped.[/li][/ul]

[jshore]

@LonghornDave

Having said that, you can obviously see the problem though. The upper income tax cuts also won’t really make that big of an impact on the deficit. That plus some meaningless spending cuts doesn’t really make a dent in the fiscal problem of the U.S. We need to address this in a bigger way.

No…Raising taxes on the wealthy does make a significant dent in the problem: Obama’s tax proposal raises $1.6 trillion over 10 years. That doesn’t solve our entire deficit problem, but it is nothing to sneeze at.

The reason why raising taxes on the wealthy contributes only a small part to the estimated economic “hit” from the fiscal cliff is not only because it is a fraction of the total amount of money involved in the tax increases and spending cuts of the fiscal cliff but also because tax increases on the wealthy have a smaller effect on the economy (at least in its current demand-limited state) than similar tax increases on people who would actually spend additional money in their pockets or on decreases in spending where that spending would go to people who would actually spend that additional money in their pocket.

Only part of our long-term problem is growth in entitlements spending. Another part is historically-low tax revenues as a percentage of GDP at a time when, if anything, we should be contemplating increasing tax revenues as a percentage of GDP since over the long-term we can’t keep raiding revenues from social security to fund the rest of government as we have been and will in fact have to start paying them back. (And, no, this is not a problem with social security — It is a problem with our not collecting sufficient revenues outside of social security and medicare to fund the rest of government.)

[LonghornDave]

@Ravenman

Wow, I called it. Half a trillion dollars in spending cats isn’t just “not meaningful,” it’s “meaningless,” but $210 billion in tax increases is “big.”

Honestly, there is a difference. The $210 billion in tax increases is not meaningful either to the long-term fiscal situation of the U.S. The primary looming problem for the U.S. is the change in demographics that results in a tremendous unfunded liability. We can debate the dollar amount of this liability, but it is something in the $50 trillion to $200 trillion range. Unless you are taking action to reduce the unfunded liability that will crush us, it is not meaningful.

I don’t think that it is dishonest or hypocritical or anything to say that entitlement legislation that doesn’t change this situation is not meaningful to the long-term fiscal situation.

When I called the $210 billion big, it is in a different context. The context of course relates to other tax legislation of similar types.

Do you really think I’m being hypocritical on that?

@Ravenman

Ok, you raise fair points. I still wouldn’t call a $210 billion tax increase “big,” because total government revenues over that time period are projected to be $41 trillion. Adding half a percent to that total is in no way, shape or form “big,” except to those who believe that every tax increase is big, and every spending cut proposed by a Democrat is meaningless.

Fine, I guess you can disagree that it is big. It’s not really a big deal to me if people don’t agree on that. I don’t think I made it a cornerstone position of mine or anything. The point I was really trying to convey is that it is not simply a case that we are returning tax rates for the >$250,000/$200,000 earners to Clinton rates. This $250,000/$200,000 will be paying higher than under Clinton if Obama gets his way because they have already had taxes raised by that 3.8% and 0.9%. The context to this is that I am wondering what happens the next time we raise taxes. Let’s say we extend the payroll holiday and Bush tax cuts on the <$250,000/$200,000 demographics for a couple more years. At the end of that, will people really be okay with a tax rate increase that only affects low and medium earners? I just can’t see people being okay to not raise taxes on this same group again.

[Jas09]

@LonghornDave

The point I was really trying to convey is that it is not simply a case that we are returning tax rates for the >$250,000/$200,000 earners to Clinton rates. This $250,000/$200,000 will be paying higher than under Clinton if Obama gets his way because they have already had taxes raised by that 3.8% and 0.9%.

A point of clarification - only the top marginal rates are proposed to increase under the Senate-passed bill. All income earned below these cut-offs will still be taxed at lower rates than it was under Clinton. Also, dividends will be taxed at lower than the Clinton-era rate (when it was taxed as ordinary income - the Senate bill taxes it at 20%).

So, for an earner over the $250k threshold you have (compared to Clinton-era rates): lower rates for the first $250k of AGI, lower rates for dividend income, the same rate for AGI over $250k, and higher payroll taxes.

Obviously whether a particular filer ends up above or below their Clinton-era liability depends, but I would guess that it likely ends up lower for most, particularly if they have large amounts of investment income.

[LonghornDave]

@jshore

No…Raising taxes on the wealthy does make a significant dent in the problem: Obama’s tax proposal raises $1.6 trillion over 10 years. That doesn’t solve our entire deficit problem, but it is nothing to sneeze at.

I think the difference of opinion is that I see a $600 billion deficit 10 years from now with still increasing Debt to GDP as not materially fixed. I don’t have any problem in raising the taxes on high earners. However, I would like it done in conjunction with a simplification of the tax code and a reform of entitlement programs. The way to accomplish this is to push everything out a few months to give everyone time to make a grand bargain. At a minimum, we should do something like the Bowles Simpson plan.

@jshore

The reason why raising taxes on the wealthy contributes only a small part to the estimated economic “hit” from the fiscal cliff is not only because it is a fraction of the total amount of money involved in the tax increases and spending cuts of the fiscal cliff but also because tax increases on the wealthy have a smaller effect on the economy (at least in its current demand-limited state) than similar tax increases on people who would actually spend additional money in their pockets or on decreases in spending where that spending would go to people who would actually spend that additional money in their pocket.

Sure, I get multiplier effect thoughts on different types of taxes. I think you would agree though that if we still have an increasing Debt to GDP ten years from now, then we really didn’t solve anything. Furthermore, we might make it much more difficult to do a real solution as the sense of urgency will be gone.

@jshore

Only part of our long-term problem is growth in entitlements spending. Another part is historically-low tax revenues as a percentage of GDP at a time when, if anything, we should be contemplating increasing tax revenues as a percentage of GDP since over the long-term we can’t keep raiding revenues from social security to fund the rest of government as we have been and will in fact have to start paying them back. (And, no, this is not a problem with social security — It is a problem with our not collecting sufficient revenues outside of social security and medicare to fund the rest of government.)

I think you need to define long-term. The fact is that our current spending levels are above historical spending as a percentage of GDP and the entitlement portion will do something like double over the next 25 years. You can not make up that gap by taxing the wealthy. So while we may have a current revenue problem now, we have a much larger expense problem in the future.

You are also underselling the social security problem. While we have historically run a surplus and supposedly have a trust fund, you very well know the money is fungible. Good luck running a surplus on everything else to make up that gap once we are running year over year deficits in social security. And, even if we can do that, the annual gap will continue to grow as the population ages.

[LonghornDave]

@Jas09

A point of clarification - only the top marginal rates are proposed to increase under the Senate-passed bill. All income earned below these cut-offs will still be taxed at lower rates than it was under Clinton. Also, dividends will be taxed at lower than the Clinton-era rate (when it was taxed as ordinary income - the Senate bill taxes it at 20%).

So, for an earner over the $250k threshold you have (compared to Clinton-era rates): lower rates for the first $250k of AGI, lower rates for dividend income, the same rate for AGI over $250k, and higher payroll taxes.

Obviously whether a particular filer ends up above or below their Clinton-era liability depends, but I would guess that it likely ends up lower for most, particularly if they have large amounts of investment income.

Dividends are also being proposed to be taxed as ordinary income for the $250,000 crowd. Point taken on rates below $250,000 for higher earners; I’m just talking marginal as a way to simplify the discussion.

[Jas09]

@LonghornDave

Dividends are also being proposed to be taxed as ordinary income for the $250,000 crowd.

The only article I can find (from the AP) that specifies this point indicates that in the Senate bill both capital gains and qualifying dividends would go to 20% from 15%. If you have some other information please let me know.

[LonghornDave]

@septimus

I’m “turning over a new leaf” for coping with these threads. I’m asking the ignorant to examine this graph.
Your turn, LonghornDave. Click; examine; acknowledge or refute.
This foolish little talking point is very exasperating. The fallacy is almost too simple to bother explaining, but I’ll try an analogy:

Quarterback hands the ball to halfback who just stands still. “Why aren’t you running?”
“One step is less than a yard and won’t really make that big of an impact on the 80 yards we need.”

Most amusing is that the very same people spouting this nonsense would be toasting themselves triumphantly as “hard-decision fiscal conservatives” if they cut spending by sacrificing PBS.

Oh .. getting back to you, LonghornDave: Did you click the link above yet? (And, BTW, restoring Clinton-era tax rates does go a long way to gaining that 80 yards!)

To clarify, your graph is talking about all Bush tax cuts. Obama is only talking about the $250,000 and above. Also, your graph is talking about the impact from the point of their taking effect. Therefore, a decent sized portion relates to added interest cost from the lost revenue’s effect on the deficit over that entire period. Its not like you let Bush tax cuts expire and the impact is nothing going forward. We will essentially always be dealing with those tax cuts. So, pull out the interest and the tax cuts for everyone below $250,000 and it really doesn’t go nearly as far.

Furthermore, you are still missing my point. The point is not fixing 2013’s deficit or even 2023’s. I am talking about the massive long-term deficits that we are facing.

[quote=“septimus, post:112, topic:642278”]

Almost every little “factoid” in this cute gibberish is wrong or confused:

[LIST][li] “Buffett is not a good example” – Have trouble much with English?Buffett came up because of his quote, not his wealth. [/li][/QUOTE]

Bullshit. Why did you bring him up in this thread? He came up in this thread as your counter to someone else misleading with statistics. It is perfectly reasonable for me to counter with saying the Buffett tax rate compared to his secretary is also misleading. I also seem to recall you saying I misrepresented you previously, me explaining how I interpreted you and the conversation and asking where the misrepresentation is, and you not ever responding on that.

[quote=“septimus, post:112, topic:642278”]

[li] Buffett’s secretary earned $60,000 in the most recent year the salary is known. The meme that she makes more arose from idiots who estimated her salary from her tax without noting that Buffett’s comment included payroll taxes like SocSec.[/li][/QUOTE]

Please provide your sourse that she makes $60,000 (or close to that).

[Jas09]

@Jas09

The only article I can find (from the AP) that specifies this point indicates that in the Senate bill both capital gains and qualifying dividends would go to 20% from 15%. If you have some other information please let me know.

OK, I found the actual bill: http://thomas.loc.gov/cgi-bin/bdquery/z?d112:SN03412:@@@D&summ2=m&

It’s a bit vague, so you may be right that dividend income for filers whose AGI is above the threshold is taxed at the pre-2001 rate (i.e. as ordinary income).

I find it odd that he AP writer could have got this so wrong, but then again the Senate bill was generally considered a dead letter until now.