Politics

[autry_denson]

If you're blaming current deficits on old tax-cuts then you should throw in Kennedy too.

Both as a percentage of national income and as a percentage of the federal budget, no single tax cut has ever cut more than the Revenue Act of 1964.

you're right, I should've brought up that 1964 tax cut. my fault.

and i agree also that there have been other decisions in history that affect today's debt. thanks for the reminder on that.

 

[Buster Bluth]

Ask the 2.5 to 3.0 million people that were on the bubble and kept their jobs whether it was worth it. It also made the car bailout go, which is about another 2.0 million.

Isn't that assuming that the bailout had a direct impact on making GM and Chrysler economically sustainable. GM isn't better off now, and Chrysler's success is more attributable to Fiat. Fiat's executives are the ones we should be thanking for Jeep's breakthroughs and the imoact on Toledo. Not the federal government's UAW bailout.

 

[Bogtrotter07]

The point I am making is to look beyond that. Are the 2.5m that kept their job just delaying the inevitable? I don't know, but the it sure looks like there is going to be a major funding crisis in the future (or the personal wealth of millions will be drained by high amounts of inflation). Is the allocation of capital needed to finance the stimulus keeping millions of 20 somethings from getting a decent job? Maybe.

As far as taxes go, nobody wants to pay them. I have never come across one person who pays more than what the IRS deems they owe. I have yet to meet one person that looks at their tax bill and thinks their fair share is more and writes a check for the difference. Nobody wants to pay taxes. If they did, we probably would still be apart of England today.

Well, they are still working. Last I checked. You should be from auto industry heavy North-west Ohio. We actually recorded unemployment higher than the great depression for a short while. Without either action, there would be just a crater at the western edge of Lake Erie. Oh, and we wouldn't be able to pay our taxes or buy things from your part of the country, including vacation trips.

That is why the upper end of the tax rolls need to be managed firmly.

 

[Bogtrotter07]

Isn't that assuming that the bailout had a direct impact on making GM and Chrysler economically sustainable. GM isn't better off now, and Chrysler's success is more attributable to Fiat. Fiat's executives are the ones we should be thanking for Jeep's breakthroughs and the imoact on Toledo. Not the federal government's UAW bailout.

Love you bud, just don't see it in the figures or the perspective. The perspective; if Chrysler hadn't been shored up, and their parts supliers hadn't been resuscitated, do you think Fiat would have ever gotten involved, especially after Mercedes dropped them like a rock. Stop by sometime and I will take you to a friend's house who is a Republican and admits that without the steps taken he would be shut down and his 45 or so employes out of work. Only bad thing is this guy is still a Buckeye fan.

 

[GoIrish41]

I've read multiple tweets today from republican strategists who are all but calling the election for Obama after Clinton's speech last night. That was among the most effective, masterful political speeches I've ever heard. Clinton systematically dismantled every Republican attack on the current administration and the GOP establishment is fully aware of it -- the honest ones are admitting it. Those of you who cannot come to grips with the a**wooping he just handed the republicans are beginning to sound a bit silly now. My favorite part of Clinton's speech was when he summed up his secret for turning the economy around during his administration in a single word ... arithmatic. The notion of trickle down economics looked rather foolish when the man with more credibility than anyone in this country with regard to the economy said he used a concept learned in grade school to get there.

 

[Ndaccountant]

Well, they are still working. Last I checked. You should be from auto industry heavy North-west Ohio. We actually recorded unemployment higher than the great depression for a short while. Without either action, there would be just a crater at the western edge of Lake Erie. Oh, and we wouldn't be able to pay our taxes or buy things from your part of the country, including vacation trips.

That is why the upper end of the tax rolls need to be managed firmly.

What makes you think I am from the south?

My point still stands tho. If you took sand from one side of the sandbox to fill up a hole on the other side, is the sandbox any different? I appreciate that northwest Ohio benefited from the spending. However, does the 24 year old who lives in Idaho benefit? Does the allocation of capital (since growth has not materialized) to pay for it shrink opportunity for others? It's a tough question to answer in absolutes, but without significant growth, we will have to pay the piper, one way or another.

 

[Bogtrotter07]

What makes you think I am from the south?

My point still stands tho. If you took sand from one side of the sandbox to fill up a hole on the other side, is the sandbox any different? I appreciate that northwest Ohio benefited from the spending. However, does the 24 year old who lives in Idaho benefit? Does the allocation of capital (since growth has not materialized) to pay for it shrink opportunity for others? It's a tough question to answer in absolutes, but without significant growth, we will have to pay the piper, one way or another.

I don't. You are from the near east, unless that Indians logo is for show.

(You like that, near (120 miles) east? Funny huh?

 

[Ndaccountant]

I don't. You are from the near east, unless that Indians logo is for show.

(You like that, near (120 miles) east? Funny huh?

Grew up in NE Ohio, but no longer live there. Sad to say, but I am a Tribe, Cavs and Browns fan.

 

[Bogtrotter07]

The sandbox analogy doesn't quite float. Like my mixed metaphor???

The economy is not a closed system, or it shouldn't be. Funny, but that is a common point that comes up with many of my Republican friends.

Probably why the job creation figures don't fall the Republican way.

 

[Rhode Irish]

What makes you think I am from the south?

My point still stands tho. If you took sand from one side of the sandbox to fill up a hole on the other side, is the sandbox any different? I appreciate that northwest Ohio benefited from the spending. However, does the 24 year old who lives in Idaho benefit? Does the allocation of capital (since growth has not materialized) to pay for it shrink opportunity for others? It's a tough question to answer in absolutes, but without significant growth, we will have to pay the piper, one way or another.

I think one of the most frightening aspects of this election is the political stakes going forward. I honestly believe that the American economy is on the verge of rebounding, which will be followed by a nice boom cycle. Economies go in cycles. If Obama wins this election, by the time 2016 comes around he will be regarded as having saved the economy and Hillary will likely get more than 300 electoral votes. If Romney wins, Obama will be regarded as a failure and Romney will win reelection in 2016 by a landslide, whether that is fair or not. Because of the shifting demographics in the country, that might be the only chance the republicans have at winning another presidential election for a generation (assuming current demographic voting allegiances hold). But I don't believe the President has all that much influence on the economy at any given moment. Like Clinton said last night, no President could have totally fixed this economy in the last three years. I think the economy will be back no later than the middle of the next presidential term (2014) regardless of who is in office, but the policy differences between Obama and Romney will have a lasting impact on the American experience for a whole generation, from social policy to who benefits from the economic resurgence.

 

[Bogtrotter07]

I think one of the most frightening aspects of this election is the political stakes going forward. I honestly believe that the American economy is on the verge of rebounding, which will be followed by a nice boom cycle. If Obama wins this election, by the time 2016 comes around he will be regarded as having saved the economy and Hillary will likely get more than 300 electoral votes. If Romney wins, Obama will be regarded as a failure and Romney will win reelection in 2016 by a landslide, whether that is fair or not. Because of the shifting demographics in the country, that might be the only chance the republicans have at winning another presidential election for a generation (assuming current demographic voting allegiances hold). But I don't believe the President has all that much influence on the economy at any given moment. Like Clinton said last night, no President could have totally fixed this economy in the last three years. I think the economy will be back no later than the middle of the next presidential term (2014) regardless of who is in office, but the policy differences between Obama and Romney will have a lasting impact on the American experience for a whole generation, from social policy to who benefits from the economic resurgence.

How will that happen? Are you saying that the same Republican policies will lead to an economic upturn? As Bill said last nigh of Republicans, "We made the mess, Obama didn't fix it fast enough, put us back in control!"

 

[Rhode Irish]

How will that happen? Are you saying that the same Republican policies will lead to an economic upturn? As Bill said last nigh of Republicans, "We made the mess, Obama didn't fix it fast enough, put us back in control!"

Thought I made this clear. Sorry. The economy is due for a massive rebound, regardless of who is President. I don't think Romney's policies will be good for the economy in the macro sense, but they won't be bad enough to derail the recovery within his term. Essentially, he'll benefit from the happy accident of timing of economic cycles. Whoever wins this election will be "in the right place at the right time" and their party will benefit in 2016.

 

[Ndaccountant]

The sandbox analogy doesn't quite float. Like my mixed metaphor???

The economy is not a closed system, or it shouldn't be. Funny, but that is a common point that comes up with many of my Republican friends.

Probably why the job creation figures don't fall the Republican way.

Which is why I keep harping on growth. If you spending money you don't have, the only way to pay for it in the future is thru inflation or growth. We are not seeing the growth needed, hence the effect of taking from one side to spend in the other.

 

[Ndaccountant]

I think one of the most frightening aspects of this election is the political stakes going forward. I honestly believe that the American economy is on the verge of rebounding, which will be followed by a nice boom cycle. Economies go in cycles. If Obama wins this election, by the time 2016 comes around he will be regarded as having saved the economy and Hillary will likely get more than 300 electoral votes. If Romney wins, Obama will be regarded as a failure and Romney will win reelection in 2016 by a landslide, whether that is fair or not. Because of the shifting demographics in the country, that might be the only chance the republicans have at winning another presidential election for a generation (assuming current demographic voting allegiances hold). But I don't believe the President has all that much influence on the economy at any given moment. Like Clinton said last night, no President could have totally fixed this economy in the last three years. I think the economy will be back no later than the middle of the next presidential term (2014) regardless of who is in office, but the policy differences between Obama and Romney will have a lasting impact on the American experience for a whole generation, from social policy to who benefits from the economic resurgence.

The problem that I see is that it is very uncertain where the growth will come from. Because of our demographics (young / old / minorities / white) shifting, it is hard to determine if the growth will be self-generated or will come from growth overseas. If it is growth overseas (that is my bet), the impact to America will be strong, but not balanced. The more free trade agreements passed, the more balanced it will become. As it stands today, the evil 1% stands to capitalize more on growth abroad. But at this point, multi-nationals have to weigh the pro's and con's of expaning in the US. Hence, why like you, I believe if corporate rates were slashed to next to nothing, the coming upturn will be more pronounced for everyone in this country.

 

[Bogtrotter07]

Thought I made this clear. Sorry. The economy is due for a massive rebound, regardless of who is President. I don't think Romney's policies will be good for the economy in the macro sense, but they won't be bad enough to derail the recovery within his term. Essentially, he'll benefit from the happy accident of timing of economic cycles. Whoever wins this election will be "in the right place at the right time" and their party will benefit in 2016.

I got what you are saying. But I would have to agree with Bill on this. Recovery is not a foregone conclusion yet IMO&IBCO.

And this ties in with NDAccountant. No way will Republicans increase taxes. Without tax increases our recovery may not be as strong, or happen as quickly.

 

[RDU Irish]

Jimmy Carter wasn't bad, he was just kicked out too early to be appreciated.

 

[Rhode Irish]

I got what you are saying. But I would have to agree with Bill on this. Recovery is not a foregone conclusion yet IMO&IBCO.

And this ties in with NDAccountant. No way will Republicans increase taxes. Without tax increases our recovery may not be as strong, or happen as quickly.

Well, I think the recovery is already underway, it just hasn't gotten up to full steam yet. What will be injured by the election of Romney is our longterm economic health because, ironically, they have no solution for the debt which absolutely has to be dealt with. I will say that it is categorically impossible to deal with the debt without increasing revenues. Obviously spending also must be curtailed, as well, but it cannot be a slash and burn approach to the budget because that will guarantee a generation where too many potential future innovators and leaders are left without an education, are left to starve to death, or are allowed to die from preventable or treatable health issues. As Clinton articulated so well last night, eliminating the social safety net has real and lasting repercussions felt by our whole society, not "just" those who are directly impacted.

 

[RDU Irish]

The problem that I see is that it is very uncertain where the growth will come from. Because of our demographics (young / old / minorities / white) shifting, it is hard to determine if the growth will be self-generated or will come from growth overseas. If it is growth overseas (that is my bet), the impact to America will be strong, but not balanced. The more free trade agreements passed, the more balanced it will become. As it stands today, the evil 1% stands to capitalize more on growth abroad. But at this point, multi-nationals have to weigh the pro's and con's of expaning in the US. Hence, why like you, I believe if corporate rates were slashed to next to nothing, the coming upturn will be more pronounced for everyone in this country.

I get the feeling everyone else reading your comments looks like your Bill Murray pic. We keep tap dancing around the issue of corporate taxes, yet 90% of the people ignore it as if it is some turd someone else needs to do something about. You are dead on with this analysis. If you want middle class jobs brought back to this country, permanently low corporate taxes along with cheap, abundant energy will make it worthwhile to battle environmentalists to start building stuff in the US again. I don't see Obama lowering corporate taxes, so the recovery would be more weighted toward US investment in growing overseas concerns. That means capital wins, labor loses.

The problem is further compounded since most federal revenue is from taxing labor - FICA plus income taxes where only 10% of revenue comes from corporate income taxes. Lost revenue from lower corporate taxes are quickly made up by increased revenue from a fully employed workforce. So capital wins more but at least labor is along for the ride in this scenario.

I know it is difficult to let those evil rich keep getting richer but guess what, they will win either way! The question is whether labor wins or gets left behind.

 

[tadman95]

I get the feeling everyone else reading your comments looks like your Bill Murray pic. We keep tap dancing around the issue of corporate taxes, yet 90% of the people ignore it as if it is some turd someone else needs to do something about. You are dead on with this analysis. If you want middle class jobs brought back to this country, permanently low corporate taxes along with cheap, abundant energy will make it worthwhile to battle environmentalists to start building stuff in the US again. I don't see Obama lowering corporate taxes, so the recovery would be more weighted toward US investment in growing overseas concerns. That means capital wins, labor loses.

I can't say you are wrong but you seem to ignore that those jobs left for cheap labor, not lower tax rates. First the companies moved the jobs to reduce costs, now we keep hearing the argument they need lower tax rates to bring jobs back. Seems pretty one sided to me.

Companies seem to enjoy the protection of our borders and our military presence around the world, they like our governmental system and our infrastructure. They just seem to want someone else to pay for it. Yet all I seem to hear about are individual entitlements and how we have to reduce government aimed squarely at individual entitlements.

I think it was 2010 when GE made roughly 6 billion dollars in profits and paid no taxes.

General Electric Paid No Federal Taxes in 2010 - ABC News

They have/had almost 800 people whose sole purpose was to reduce taxes through loop holes and lobbying for special tax exemptions. Worked pretty well I guess. I personally can see no reason why they should not pay taxes. They are using the roads, airports, water systems, certainly the Congress, they should pay.

JMHO

 

[Rhode Irish]

.

 

[Irish Houstonian]

...If you want middle class jobs brought back to this country, permanently low corporate taxes along with cheap, abundant energy will make it worthwhile to battle environmentalists to start building stuff in the US again. I don't see Obama lowering corporate taxes, so the recovery would be more weighted toward US investment in growing overseas concerns. That means capital wins, labor loses.

The problem is further compounded since most federal revenue is from taxing labor - FICA plus income taxes where only 10% of revenue comes from corporate income taxes. Lost revenue from lower corporate taxes are quickly made up by increased revenue from a fully employed workforce. So capital wins more but at least labor is along for the ride in this scenario.

I know it is difficult to let those evil rich keep getting richer but guess what, they will win either way! The question is whether labor wins or gets left behind.

We shouldn't tax income at all -- taxation is what you do when you want less of something. We all need more income.

Tax consumption. A national sales tax. VAT. Import tax. Added taxes on stresses to the economy like alcohol/cigarettes/gasoline. Legalize marijuana and tax smoking it. Allow gambling and tax it. Allow prostitution and tax it. The states can decide when/where these can take place, if at all -- all the feds need is their cut.

No more loopholes, deductions, capital gains nonsense, loss carry-forwards, stepped-up basis, estate tax planning, or yearly paperwork. No more audits. No more hoarding receipts. Just simple taxes that you see on your receipt when you buy something.

 

[Rhode Irish]

I would like to see any tax reform in the United States include the following items:

1. Lower marginal rates and eliminate loopholes and tax expenditures, thereby broadening the base. This sounds pretty easy and popular in theory. A lot of tax expenditures, particularly refundable credits for low income earners, would need to be recreated through concurrent legislation in order to stave off catastrophe for the poor. Functionally, this should result in the wealthiest people paying more total tax dollars, at least until the debt issue has been effectively addressed. Better horizontal and vertical equity should be achieved by this approach. Politically difficult to do.

2. Integrate corporate and personal income tax by eliminating the "double taxation" impact created by the the corporate level tax and raising rates for capital gains. Increase in cap gains rates would have to make up for lost revenue at the corporate rate, but when done in concert with elimination of tax expenditures the base should be broad enough to spread the hit on that around. Again, terribly difficult politically because you'd have to sell the elimination of corporate tax to liberals and increase in the cap gains rate to republicans. Good luck with that.

3. Eliminate the debt bias from the tax code. Currently, a taxpayer can deduct interest payments but not equity returns. This creates an incentive for companies to borrow rather than seek investment, and leads to firms being leveraged to dangerous levels. This is really more of a financial sector policy concern, but from a pure tax standpoint it does not make much sense to tax capital raised by debt differently than capital raised by the issuance of equity.

There is obviously more, but those are the big three. The problem is that in an environment where half the people in Washington are focused solely on destroying the other half of the people in Washington and making them look bad, it is very difficult to solve any serious substantive problems. I'm not optimistic that serious tax reform can be accomplished during this coming administration, regardless of who is in the White House.

 

[ND NYC]

been off the board for a while, some randon thoughts as election season heats up:

Obama could have eliminated the bush tax cuts if he wanted when they expired last time

re: the debt....Obama shold have embraced and pushed for the findings of the simpson bowles commision. he failed to realize his dems could fight off the lefty complaints about it and he could have had that old school republican alan simpson take care of the repubs who disagreed with it. im of the opinion that "its a fair deal when both sides feel they got screwed a little bit". their commish report did have some hard and fast plans to cure a lot of ills that now and in the future will be with us

clinton hit it out of the park last night (on this even this repub will agree). how does obama follow that up??

forget the independents...this election will all boil down to turnout by each parties base in the key battleground states. advantage: romney.

overall i think romney's "wooden" (lack of a better word) personality may be his ultimate downfall in this election. he hasnt ever really said WHY he wants to be POTUS and what his VISION is. he may be incapable of ever articulating it if hasnt figured it out by now

Did W attend the GOP Convention?

the jobs report the thurs before election day is gonna have an impact

in terms of sheer entertainment, i'm more interested in the VP debate than the POTUS ones

the one reason i worry about our country now and in the future is the income disparity we have seen skyrocket since the 1980s. the rich are getting richer and the poor are getting poorer...im still waiting for any party or candidate to adress this issue specifically.

Beat Purdue!

 

[Rizzophil]

I would like to see any tax reform in the United States include the following items:

1. Lower marginal rates and eliminate loopholes and tax expenditures, thereby broadening the base. This sounds pretty easy and popular in theory. A lot of tax expenditures, particularly refundable credits for low income earners, would need to be recreated through concurrent legislation in order to stave off catastrophe for the poor. Functionally, this should result in the wealthiest people paying more total tax dollars, at least until the debt issue has been effectively addressed. Better horizontal and vertical equity should be achieved by this approach. Politically difficult to do.

2. Integrate corporate and personal income tax by eliminating the "double taxation" impact created by the the corporate level tax and raising rates for capital gains. Increase in cap gains rates would have to make up for lost revenue at the corporate rate, but when done in concert with elimination of tax expenditures the base should be broad enough to spread the hit on that around. Again, terribly difficult politically because you'd have to sell the elimination of corporate tax to liberals and increase in the cap gains rate to republicans. Good luck with that.

3. Eliminate the debt bias from the tax code. Currently, a taxpayer can deduct interest payments but not equity returns. This creates an incentive for companies to borrow rather than seek investment, and leads to firms being leveraged to dangerous levels. This is really more of a financial sector policy concern, but from a pure tax standpoint it does not make much sense to tax capital raised by debt differently than capital raised by the issuance of equity.

There is obviously more, but those are the big three. The problem is that in an environment where half the people in Washington are focused solely on destroying the other half of the people in Washington and making them look bad, it is very difficult to solve any serious substantive problems. I'm not optimistic that serious tax reform can be accomplished during this coming administration, regardless of who is in the White House.

Great post Rhode Island - love the insights and the ramifications of your ideas

 

[Domina Nostra]

the one reason i worry about our country now and in the future is the income disparity we have seen skyrocket since the 1980s. the rich are getting richer and the poor are getting poorer...im still waiting for any party or candidate to adress this issue specifically.

This is a good point, but what we really should be concerned about is the quality of life of the poor. The "disparity" argument, at least in its simple form, is a little off-base.

- If a poorish guy is getting paid $20,000 a year to work in a factory, and his boss is making $100,000, the boss is making $80,000 more.

- If the company suddenly comes up with a great idea and tripples everyone's incomes, the poorish guy makes $60,000 and the boss now makes $300,000, the boss is now making $240,000 more.

So while the poorer guy can technically argue that the discrepency between their two incomes is growing, its also true that he is a lot better off. In other words, sometimes the discrepency argument can be very deceiving.

 

[RallySonsOfND]

Simplify the tax code (lower rates and cut ALL deductions). I don't care if you make $5000 a year you should pay federal income tax still. The fact that a huge portion of this country does not pay federal income tax is unacceptable. (I'm fully for elimination of the income tax, I just don't see it ever happening)

A national sales tax that requires a 2/3rds vote in the House and Senate to raise it.

NO ESTATE (DEATH) TAX. We are one of the only countries that still has one. I don't care that its for estates worth over $1 million. 50% is ridiculous and it really doesn't take much to create an estate worth over $1 million.

Corporate gains tax down to 10%, encourages investing.

 

[Rhode Irish]

This is a good point, but what we really should be concerned about is the quality of life of the poor. The "disparity" argument, at least in its simple form, is a little off-base.

- If a poorish guy is getting paid $20,000 a year to work in a factory, and his boss is making $100,000, the boss is making $80,000 more.

- If the company suddenly comes up with a great idea and tripples everyone's incomes, the poorish guy makes $60,000 and the boss now makes $300,000, the boss is now making $240,000 more.

So while the poorer guy can technically argue that the discrepency between their two incomes is growing, its also true that he is a lot better off. In other words, sometimes the discrepency argument can be very deceiving.

The income disparity argument is a little different than what you're getting at here. In your example, the "poorish guy" is making 1/5 of his boss in both scenarios. But the total dollar difference isn't the crux of the argument. The argument is based on the apportionment of income. As the economy has expanded over the last 40 years, the growth has been concentrated among the top earners, not spread proportionally as in your example. (See chart below from the CBO.)

 

[tadman95]

That's a really BIG point you're making! LOL

Edit: And now a really hard to read graph! LOL

2nd Edit: Sweet!

 

[Rhode Irish]

The graph should show up in normal size and expand only when you click on the bar at the top. Possibly the page hadn't fully loaded if it initially looked really big to you.

Maybe I'll try to find a different version of it on the internet.

Update: changed to a different graph, although this one may make my point a little bit better anyways.

 

[phgreek]

Simplify the tax code (lower rates and cut ALL deductions). I don't care if you make $5000 a year you should pay federal income tax still. The fact that a huge portion of this country does not pay federal income tax is unacceptable. (I'm fully for elimination of the income tax, I just don't see it ever happening).

TOTALLY agree...the import of this little package of concepts is huge...