Interesting...thanks for clarifying that. I live in the middle of nowhere so that explains why it sounds like an assload of money to me lol I don't know which is why I asked.
If you want to continue having a huge military along with meeting the payments that are due to retires going forward we have to tax those that have both income and savings. That's where the money is you can't tax people that have neither income or savings. The tax code continues to promote spending over savings and ultimately you have to tax those who actually saved in spite of it. This isn't about redistribution as much as it's about a system that is desperate for consumption and inflation to stay solvent and tax those who have actually saved in spite of it. It's not easy to devise a tax code that rewards people for taking on debt (spending) and punishes them for saving and investing without taxing savings and investments more then income at some point. Apparently we have reached the point.
And considering how dependent our economy is on consumer spending, it's not like a consumption tax is something you'll hear people clamoring for.
Value-added taxation as a significant part of the overall tax structure. Treating investment income as regular income. An estate tax that is rational and encourages people to maintain their investments after death and pass those along to their heirs. Probably most importantly, learn to live within our means as a nation. You can't be the world's cop and not pay a price long term. Yeah if you back away from that other people will step forward but as long as they do so within a coherent world order that's a good thing not a bad thing.
But the problem is that we know with certainty what we will be able to collect in taxes, regardless of where rates are directed. About 20% of GDP - no more. Hauser's Law. The notion that we can just raise tax rates on ANY class - upper, lower or middle - and see an increase in revenue automatically follow is a fallacy that 100 years or tax data has disproved. Paul Volcker made this point two years ago when he suggested that the only honest option was to find some other sources of revenue. Everyone on both sides peed themselves, because there's really only one "other" he could be referring to. And even though it sounds real nice to tinker with income tax rates to increase revenue to narrow the budget gap, we know that the one thing is WON'T do is increase revenue to narrow the budget gap. It would have to be the first expansionary tax increase in history to achieve that noble goal. So, we know, then, that this isn't about raising revenues, it's about chopping down the top income earners. We should at least be honest about that.
The difference between 16% (2003 and 2004) and 20% is real. A lot of the issues we have right now are based on historically lower tax collection rates than the US has attempted in the past. In fact in this 3 year span of deficit explosion the US has averaged under 16% in revenue collection as a percentage of GDP. If we'd been at 18% for the last decade the deficits would have been lower and the national debt wouldn't have exploded the way it did. If we hadn't been fighting an undeclared world war and creating massive new entitlements at the same time we'd be in much better shape. It's the lies that both parties have told over the last decade that are haunting us right now. Those layered in on top of the long term lie. "Just go shopping" was a lousy way to finance two wars and a Medicare expansion.
And as Br4dw4y5ux mentioned (I had to copy/paste that handle... no way I'm typing that out), we're not really anywhere close to 20% of GDP. The total receipts in 2011 were 15.4% of GDP. Even if we're only able to get to the 19.2-ish % of GDP enjoyed during the Clinton years, you're talking about a 25% increase in revenue... that's an increase of (approximately) $400 billion/year. Link This whole modern conservative "philosophy" is really starting to show itself for what it is -- political. (An interesting case study in group projection, but that's another issue.) The deficit is apparently a vital concern that needs to be worried about now. Except we shouldn't raise taxes at all. Just cut spending. When times are good we need to cut spending and lower taxes. When times are tough we need to... uh... cut spending and lower taxes. So what do you want, SJ? Do you really want to lower the deficit RIGHT NOW? Do you want a serious conversation about that? Or do you want to put forth the same strategy regardless of the situation?
That bold part is correct. But the whole point of looking at tax receipts as a percentage of GDP isn't to target a ratio; it's an acknowledgment that there's a cap. It's not where we aim for, it's where we inevitably go. No matter what we try. Raise top end rates to 80% and history shows us the revenue it won't create. That's the point. You can argue Bush Era spending if you like. That’s a fair argument. But you're taking a HUGE false leap by suggesting, as most on the left do, that the deficit ballooned during the Bush years because of revenue-side Bush Tax Cuts. Both rounds of cuts were followed by economic growth and increased tax revenue. Revenue as a percentage of GDP may have gone down, but growth and tax revenue both went up. Given the choice between gross revenue and revenue as a percentage of GDP, I can't imagine anyone choosing the latter. Although, that certainly seems to be where the 2012 debate wants to go. If spending is the issue, that's a better discussion. But that's not where the argument resides today. The point in 2012 is all about "rich" people "paying their fair share," all framed in the context of raising revenues. Except that we can say with a fair amount of certainty that it won't raise the revenues needed to narrow the spending gap. Not in the way the populist tax-the-rich meme wants us to think. The best semi-rational argument you could make in favor of raising ANY taxes right now is that it won't affect economic growth. That's the argument that Barack made during the campaign when he kept talking about Clinton Era rates. Ignoring, of course, that we had a peace dividend, military consolidation and a huge dot-com boom to play with. Ignoring also that spending levels are just crazy-different. If we’re going to pretend that increasing the revenue side is a real-live goal, the focus should be on encouraging growth. Expanding the pie. But then, it isn't about revenues. It can’t be. It's not about growth either. This is all about equalizing wealth disparity. Except, instead of broadening the middle class by encouraging movement from the bottom, the administration wants to increase the ranks of the middle class by cutting them off from the top. Brush all the rhetoric aside and that's clearly the plan. Because, again, it can't be about revenue and spending seems only gets a passing mention. Why would you ruin an otherwise serious post by perpetuating the GWB "just go shopping" myth? That's terrible, Br4d. I won't waste my time dismantling that. You should look into it yourself, though.
See above. You and Br4d are both making the same mistake by arguing Hauser's Law in reverse. Misses the point of it. I'd be glad to have a serious discussion, but you both need to back up a step and appreciate the fundamental point of the ratio. Look, EVEN IF the economy could support a top end tax rate of nameyourpercent - and I think it clearly could, because it has in times of strong growth - if revenue is your goal, I doubt you'll find a serious economist who would suggest increasing rates in the sluggish economy will turn on the spigot. The best you'll see is an argument that raising top rates won't have a negative effect. And that's the argument Barack has been making. The "fair share" argument. Not a "we need the revenue" argument.
I'm not arguing it in reverse. I'm arguing that we are not near the point where you start considering the law relevant. You worry about asymptotic behavior when you're close to the asymptote, not before. The only reason increased revenues via taxation is even being put forth at the moment is because the current conservative philosophy has decided that getting the deficit under control is vital... although it has become clear that is more for political than economic reasons... unless the GOP is deciding to admit they're closet Kensyians.
Yes, you're using it out of context. You want to suggest that there's untapped revenue and you want to frame it in the context of the ratio rule. But, as I said, the best argument you could use to support that would be to suggest that raising rates will *probably* have a neutral effect on growth. Except that, I think you'll find most serious people concede that tax increases are contractionary. Even on the left. So, you're making the classic leftward math error by assuming constancy in growth and minimizing the negative impact of raising rates. There are more moving parts than that. If the pie contracts, it's a self-defeating tax increase. All under the flawed notion that there's untapped revenue. Increasing tax revenue in any serious way means increasing growth. Simple. Here's what I suggest: if the administration (and, I guess, you) would be honest about why it wants to raise top end rates, I will be honest and admit that raising top end rates in expansionary times isn't a violation against nature.
I agree completely... except for the part about who is using what out of context. The only reason increased tax rates are on the table right now is that some people(tm) have decided that it is imperative to fix the deficit problem right now as opposed to getting the economy growing steadily first and dealing with the deficit after. Slashing government spending also has a contractionary effect on the economy. I think you'll find most serious people also agree with this. And it's the public sector jobs that have been the largest drag on employment the past 2-3 years. So there are two questions: 1. Do we need to get the deficit under control right now? 2. If so, what is the best way to control the deficit? I don't think anyone is being dishonest about it. I think it's pretty straightforward... the conversation right now assumes that the answer to question #1 above is "yes." But I don't think the current administration is driving that conversation. But, assuming that the answer to question #1 is "yes," I do think the best way to control the deficit -- the way to get the most bang for the buck (or do the least amount of damage, I suppose) is to tax those who can most afford it. The CBO calculated that going back to the Clinton-era rates for the top 2% would cost something like 200,000 jobs or so. That's not good, but it's far better than what the CBO predicts if Congress can't pass anything (1.8 million jobs). If it were up to me, I'd say cut tax rates (or at least keep all current tax rates in place), and print more money for the next two years or so. Interest rates are basically non-existent. Inflation is low. Give more money to the states to hire back those teachers and firefighters and even the worthless bureaucratic officials and paper pushers until we are seeing more sustained growth. Then deal with the rest of the shit.
Some people? How about everypeople. Even Barack Obama, who set up his own little debt commission - two of them, in fact - to allegedly address the issue. To be clear, the problem we're talking about has less to do with reckless discretionary spending (although that's certainly part of it) than it does uncontained entitlement spending. And the reason why any of this is important in 2012 is because we have a fair idea of when the debt:gdp ratio reaches a critical mass. We were headed there anyway. These last four years we've advanced spending without any matching growth. It's also convenient ignorance to suggest that increasing tax rates are the only way to increase revenue. But that's Barack's strawman way of doing business. Everyone knows the other way. It's just the second biggest political football going. Mitt Romney was the coward who danced around the types of deductions he'd limit. Barack Obama was the coward who decided it was better to screech about Big Oil subsidies and avoid serious discussion altogether. Yes, but I don't think you know what sort of "slashing" has been proposed, and you don't get to argue these things in a vacuum. We know what "spending" we're mostly talking about, we know its trajectory, we know it's unsustainable and we know there's no amount of income taxation that could bridge that gap. This "slashing" you're talking about is something everyone agrees needs to be done in some form. Everyone. I suspect that the president doesn't want to tackle this must-do issue until after the 2014 mid-terms, but we've been talking about Medicare, Medicaid and Social Security reform every national election cycle since the 2000 election. It isn't new. It's just closer to critical. We need to address entitlements, primarily. So, yes. And, once you answer the first question, the second question answers itself. Because there is no amount of rate tinkering that addresses question 1. Those aren't two mutually exclusive options. I can't imagine why you'd pose them that way. We don't NEED to lose 200,000 jobs any more than we NEED to lose 1.8 million. We can have neither. It is patently dishonest to frame this as a "tax the rich" or nothing because taxing the rich doesn't even begin to tackle the problem. So it's disingenuous. Pure politics. QEternity has been in full bloom for a couple months and the Fed isn't doing any less buying or setting any higher rates for the foreseeable future. How much more printing could we do? Not to mention, I don't understand why THIS isn't the target of the populist leftward anger. We're giving free money to Wall Street in yet another wealth transfer from the bottom to the top. It would be one thing if all we got were crickets; but, in this case, guys like Chuck Schumer were begging for this. Unless by "print more money" you mean more deficit spending. In which case, I couldn't disagree more. If we're going to borrow more money to inject into the economy with the hope of growth, I'd rather drop twenty dollar bills from a helicopter than hire more teachers and firefighters and I'd ESPECIALLY not hire more worthless bureaucrats to stand in the way of productive sectors of the economy. If it were up to me, I'd approve Keystone, reopen recently closed Federal drilling lands and step on the EPA to get it out of the way of every domestic oil or gas resource, all with the hope of becoming the world's biggest energy exporter and recreating the same sort of boom that we saw in the second Clinton term. It's just about the only opportunity for dramatic growth. Until someone thinks up some other new industry.
To say we have been advancing spending the last 4 years without any growth is a bit disingenuous. The last serious growth we had was at the back end of Clinton's Presidency and before he left we were in a recession. Bush increased spending dramatically with the new war on terror and while his tax cuts got some growth for a few years we again had a burst bubble before the Obama administration came into office. This, unlike the Clinton bubble was more than a little recession. The Republicans under Bush pushed for growth through tax policy, under Obama the Republicans pushed for austerity during a recession. We live in a democracy and as much as I don't like the tyranny of government, any government I understand that elections and outcomes matter and the winners get to impose their form of tyranny backed by the people as opposed to some alternate system of tyranny. When you have a huge imbalance in those who have money and those who don't guess where the taxes are going to have to come from? Now what's dishonest is to believe that any of our politicians have the balls to limit deductions all of which have powerful constituents behind them and are popular with the general public. Romney and Ryan failed to make the argument in large part because neither one of them could name one deduction they would actually get rid of. It's much easier to tax those with money, savers and high earners then it is to limit deductions apparently. While I agree it's lazy, why is it wrong for the President to deal in political reality? The President wasn’t the only one to run from Simpson/Bowles Ryan and Romney ran from it just as hard. Tax policy is where political power comes from in this country and expecting the winners to reduce their power for the good of the country just because you're on the lossing side and your side did nothing to get a deal done when they had power is crying over a lost opportunity. Conservatives blew a real opportunity to support the Presidents commission because they have been fixated on defeating the President rather then compromising when they were in a position of shared power. Now they are coming to the table in a weaker position. When the Speaker and Senate Minority leader put Simpson/Bowle on the table you can stop crying about how unfair the President is.
I know how you like to play both sides, but this is just simple math. You can whine about Bush Era spending. Even true conservatives do. Just look at the spending from administration to administration and find another that has advanced baseline spending to the same degree as these last four years. This is just all over the place. If you're enamored with Simpson Bowles, which plan would you say represents more of the Simpson Bowles plan? Trick question. Everyone seems to agree we need "tax reform." Everyone seems to agree we need "entitlement reform." Everyone seems to agree that we need to "control deficits." I'm not sure what you're trying to say at all. Leave aside Mitt Romney's cafeteria card of deductions. That ended with his campaign. There's been a tax plan on the table for two years, the goal of which was to broaden the tax base without raising rates. If the only other plan - the one President Obama gives us - doesn't have enough votes to even reach the floor of the Senate, then what on earth could you be defending?
When you say everyone thinks we need entitlement reform I don't agree at all. These entitlements as you call them are essentially pension plans that people have paid into for their entire lives. The fact that our representatives haven't operated in a way to make these pensions sustainable is no reason to call them entitlements or if you prefer welfare. The public by wide majorities support Medicare and SS and don't view them as entitlements at all, they view them as pensions that they have paid into to guarantee them income and health care in their senior years. The fact that we have underfunded these programs doesn't suddenly turn them into an entitlement to be taken away at the whim of politicians who can't come to an agreement on how to fund them. As far as Simpson Bowles, I'm not enamored with it at all, I would dump every deduction in the code but that's not going to happen. What I'm enamored with is a decent plan that will be better than any plan either party pushes through or ultimately compromises on. Simpson Bowles fits that bill nicely. Everyone agreeing doesn't make it right by the way. One of the biggest crocks of shit perpetrated on the public is Bi-partisanship gets you good results. Bi-partisanship in many ways is awful. I would much rather our representatives stopped calling SS and Medicare entitlements and started taking on the responsibility of funding it properly or if you will raise taxes to pay for a program the public overwhelmingly supports.
This is just you talking out of both sides of your mouth. If the deficit is a problem, increased revenues is one way of dealing with it. So is cutting spending. Wherever you cut spending, it will have a negative effect on the economy (big or small). Wherever you raise taxes, it will have a negative effect on the economy (big or small). So once you decide that the deficit is the issue you want to tackle, it's completely disingenuous to complain about the effects the austerity plan would have on the economy. And you've got to be kidding about this "convenient ignorance" bullshit, as though tax increases are the only things being talked about. The plan the GOP shot down last year was 6-to-1 spending cuts to revenue increases, dollar for dollar, and the current plan put forth by Obama has a cuts-to-revenue ratio of (roughly) 2-to-1 (depending on how you want to classify the savings from wrapping up the wars). Regardless, it's hardly as though spending cuts are being ignored or have ever been ignored in this debate. "Convenient ignorance" indeed.
Agree sj - bottom line - attack the big earners. How dare they earn that kind of money and bitch about contributing a wee bit more. And i am not referring to those ultra rich, I am referring to the sub 500k, big city crowd, that already gets taxed out the ass. This subset of folk is gonna hunker down and cut their spending which is going to send an already teetering economy into recession, bar none. Yeah that it'll stimulate this economy. My ass. This Type of poltical and social psychology that is being festered by the current administration is going to be the ultimate downfall. It is causing tensions at work, in neighborhoods, even within families. But what do I know I'm just giving the company line.
Cap - by far the tax increase portion is getting the bulk of the airtime from the media. And of course me thinks that's the rigged approach courtesy of the current White House. I'm also a political darksider as well as a NYJ darksider
