Regardless of how you want to word it (tax cuts expire or tax increase for the wealthy) I don’t really see the point. I keep hearing, but can’t find solid links, that the tax increase for those making over $250K will fund the government for about 8 days and will hit small business owners that file income taxes as individuals.
I realize that the effect on small business owners is up for debate. The bigger question is why fight so hard and threaten to let all of the tax cuts expire just to tax the “rich” and fund the government for a little over one week…especially in this economy? For those that favor an increase in the rates for people making over $250K is it only a matter of fairness for you or do you honestly feel it will help the economy, federal budget, etc.?
I’m going to need a cite for that. According to this, the Bush-era tax cuts are the largest driver of public debt.
I believe, and I believe the most common justification is, that it will help the budget. I rarely see anyone arguing that it will improve the economy, just that opponents of letting it expire insist it will tank the economy, and proponents doubt that it would.
I’m not quite following the objection here. Are you saying that the amount of money it raises is not significant enough to matter? If budget deficit reduction talks focus on only things that make up more than 2% of revenues or expenditures, and exclude all the “small stuff,” then we’re never going to get anywhere.
And I have to say, raising revenues by about 1 or 2 percent is nothing to sneeze at.
We can respond to this without even asking you to Google for valid numbers. The “tax increase” either involves a lot of money or only a little money – You can’t have it both ways. If it’s a lot of money, it will help address the deficit. If only a little it will have little effect on Job Creators. To pretend, in the space of a single sentence, that it’s both a lot and a little goes beyond mere innumeracy to become deliberate obfuscation.
And, for the umpteenth time, the “over $250k” tax increase is on marginal income, i.e. it will have very little effect on someone who, after deductions and exemptions, makes a mere $300k. People making over $500k will pay a few thousand more but, although we admire their sacrifices as Job Creators, isn’t it true that they can afford to help more than those at the bottom?
All of the Bush tax cuts are. The middle class tax cuts are worth $3.3 trillion over ten years. The remainder are $700 billion over 10 years.
I don’t have a problem with letting any or all of the Bush tax cuts expire, but once we’ve done that, it’s time to acknowledge that we have a big spending problem and we need to start addressing it. I’ve always felt Republicans should give in on this, because it’s a distraction from the spending debtae. let Democrats raise taxes as much as they are politically able, then say, “Okay, now what do we do? Still $6 trillion to go.”
I think that we don’t need to raise revenue, but if that’s the price of compromise, ti’s better than the alternative.
REvenues, even with the BUsh tax cuts in place, are expected to rise to 18%, which is the historical average. Spending, on the other hand, is forecast to remain at a historically high level. So spending isn’t just the bigger problem, a case can be made that it’s the whole problem.
First off, given that we are only talking about an at most 10% increase in the amount of taxes paid by a small group of people, it would be hard to imagine that it will pay for a substantial amount of the total federal budget. A better comparison would be to look at the affect on the deficit rather than the relative size of total federal spending. With that comparison, it will pay for about one month of the federal deficit. No solution, but a big step in the right direction.
Secondly the plight of the small businessman is a buzz word that always trotted out by republicans who are really far more worried about their rich big business cronies, rather than the mom and pop down the street. In fact only about 3% of small businesses will actually be affected, and even in that case it is only on income over the $250,000 mark so someone earning say $300,000 will only see a slight increase in their total tax rate. The only people who are really going to suffer are those who are earning profit substantially more than $250,000, at which point I have a hard time seeing them as a small business, or worrying about their financial health.
WTF are you talking about? Common sense dictates that a sum of money may be huge for an individual small business owner but next to nothing for the federal government. So, again, WTF are you talking about?
Yes, I am aware of the marginal tax rates but thanks for pointing out the obvious. Of course they can afford to pay more than those at the bottom. They do pay more than those at the bottom. What’s your point? The question is whether the small amount raised is justified in light of the potential harm to small business owners and the economy.
No, I am questioning whether the small impact a tax increase may have on increasing revenue is justified in such an anemic recovery. The harm done to the economy may cost more in the long run than the increased revenue.
But you are in favor of cutting spending. Do you think spending cuts will help the recovery? Will firing more government workers help the economy? Has it?
Please note that Democrat have always been willing to consider tax increases and spending cuts. Republicans are the ones who signed the Norquist pledge and are willing to only consider spending cuts. So much so that they are considering silly workarounds like letting the tax cuts expire and then passing new tax cuts for the middle class so that the Republicans don’t have to violate the letter of the pledge. Is that any way to run the government? I think not.
I don’t know if cutting spending would hurt the economy more or less than raising taxes. If cutting spending resulted in more money in the pockets of private citizens then I would not think that cutting spending would have an adverse effect of the economy. Borrowing or printing money cheapens the dollar so increased government spending may have an adverse effect on the economy.
I’m not aware of too many federal employees losing their jobs. Federal employment has grown 13% over the course of the recession while private employment has decreased.
Both parties seem only interested in decreasing the growth of spending and don’t have the stomach to propose actual cuts. Even the sequestration is being resisted by both parties and had to be set up as a trigger if no deal could be made.
The impact of cutting spending in a recession is less proven than the impact of raising taxes. That’s mainly because no nation has ever tried to only cut spending during a recession as part of an austerity plan. Tax increases are always part of the mix. However, when tax increases are the larger element, austerity never works. The successful cases, like Canada and Sweden, involved a lot more spending cuts than tax increases. I think the ratio in Canada was something like 15-1 spending cuts over tax increases.
Comparing the revenue increase to the deficit is a better way to frame the debate. The point, though, is that this may not be the best time to impose a tax increase. The super rich can avoid taxes but, in doing so, end up putting their money in places that are not as productive. Meanwhile, the small business owners who get hit may not be able to hire as many new employees.
Heritage used data from the Treasury Department to show that 28 percent of small business that actually employ people would be affected. I haven’t read the entire Treasury document but they separated small business that employ people from individuals that claim business income on the side. Here is the relevant part from the Heritage study: