Politics

[Buster Bluth]

?

What?

 

[Buster Bluth]

What is bad about the recent tax cliff deal is although top income tax rate went up to almost 40 percent. The top end capital gains tax only went up from 15 to 20 percent. Most rich earn a good portion of their income from their investments or capital gains so they are still the winners of the deal.

You seem to know a lot of financial stuff. A question:

Doesn't a low capital gains tax help the stock markets and such, which in turn help everyone's 401ks and retirement pensions?

Wouldn't raising the capital gains tax be dreadful, in the sense that it would threaten America's position as the best place to invest your money? I'm all for raising taxes on the rich, but capital gains taxes are funky to me.

 

[Downinthebend]

What?

Military spending might be constitutional, but it can certainly be misused or unneeded, still making it a "waste" under my interpretation of the word.

 

[DSully1995]

Damn buster you take addrerrall tonight? Dropping mad facts all night...

EDIT: Being the president sucks, no one does it for perks or money, all of them could make 10x at a private company, they are trying to make history reme,ber them really

 

[Rack Em]

It's not just the Obamas. Winning and election nowadays has become like hitting the lottery. They have perks that are plain stupid.

That's what I was getting at. Unfortunately some posters took what I said out of context.

 

[chicago51]

I

You seem to know a lot of financial stuff. A question:

Doesn't a low capital gains tax help the stock markets and such, which in turn help everyone's 401ks and retirement pensions?

Wouldn't raising the capital gains tax be dreadful, in the sense that it would threaten America's position as the best place to invest your money? I'm all for raising taxes on the rich, but capital gains taxes are funky to me.

Perhaps your point is reason to keep it low. It was 39.6 percent 90s during the boom and it didn't seem to affect things. Yes as you mentioned the boom was due to circumstance and not just policy. So I'll say I honestly don't know enough about the affect it would have.

I guess the bigger issue is closing the loopholes in the off shore tax havens.

 

[Ultimate Penn St. Hater]

If you think Presidents actually take vacations, you're an idiot.

I was talking about time away from the White House. If you didn't understand that then you're the idiot.

 

[irishff1014]

Politics in general are getting ready to get ugly. I heard from a lot of old people that every position should of been taken out of dc and new ones put in. Here in Maryland I can see that we are headed down a dead end road.

 

[enrico514]

What cuts you wanna make social security, medicare, medicaid. Screw the poor people? Look I'm not in favor of free handouts in fact I wish people on unemployment had to do community service to get unemployment benefits.

Our domestic non elderly spending is lower as a percentage of GDP than it has been in a generation. The Koch brothers want you to think spending is the problem.

As a canadian I can tell you that the problem with handouts is that they discourage work and that many of the recipient are not truly "in need". Another major problem is that the way the US and many other developed countries are going, we won't be able to afford helping out those who truly need it at some point in the future.

And... the US does have a HUGE spending problem.

 

[irishff1014]

As a canadian I can tell you that the problem with handouts is that they discourage work and that many of the recipient are not truly "in need". Another major problem is that the way the US and many other developed countries are going, we won't be able to afford helping out who truly need it at some point in the future.

And... the US does have a HUGE spending problem.

That's the case already.

 

[enrico514]

You seem to know a lot of financial stuff. A question:

Doesn't a low capital gains tax help the stock markets and such, which in turn help everyone's 401ks and retirement pensions?

Wouldn't raising the capital gains tax be dreadful, in the sense that it would threaten America's position as the best place to invest your money? I'm all for raising taxes on the rich, but capital gains taxes are funky to me.

Contrary to what Bernake & friends would like people to believe, a strong stock market does not equal a strong US economy.

Higher capital gains would hurt the pensions significantly less than the manipulated low interest currently in place. Personally I would favour higher capital gains on holdings kept for short periods of time.

 

[CanadianIrish]

We do not have a taxation problem, we have a spending problem.


Subsidies skew market prices, and huge government debt SHOULD skew interest rates (But ours are being held artificially low and if you think that comes without consequences...)

That's not true. Tax revenue as a portion of GDP is lower than normal. It is typically over 18% of GDP and has been around 15% since 2009 and has been on a downward trend since Bush (went from 20.6% in 2000 to 15.1% in 2009). Revenue as a percentage of GDP hasn't been this low since 1950.

That's not to say there isn't a spending problem, because there is. But saying there isn't a revenue problem is simply not true.

 

[Ndaccountant]

That's not true. Tax revenue as a portion of GDP is lower than normal. It is typically over 18% of GDP and has been around 15% since 2009 and has been on a downward trend since Bush (went from 20.6% in 2000 to 15.1% in 2009). Revenue as a percentage of GDP hasn't been this low since 1950.

That's not to say there isn't a spending problem, because there is. But saying there isn't a revenue problem is simply not true.

There are a couple of reasons for that.

1. The temporary cut for medicare and social security taxes played a HUGE roll. Take a look at this graph. As you can see, the drop in employment during the recession (gray bar) definitely slowed down the growth of employment tax receipts. However, once the payroll tax holiday was implemented in 2011, you see the drop in receipts. This drop in 2011 coincided with GDP growth. A double whammy when you are measuring receipts as a % of GDP.

2. Loss carry forwards. With the huge amount of losses some accumulated during the market drop, many sold to be able to record the loss. Since these losses can offset gains in the future, the increase in the market has not generated the same amount of revenue on investment income.

3. Corporate income tax receipts as a % of GDP is low compared to historical standards. But, this has more to do with bonus depreciation and loss carry forwards. This is well documented here. Tax Break Pushes Corporate Taxes to Just 12.1% of Profits, Lowest Level in 40 Years - WSJ.com

So, yes, revenues are low. But there are many reasons for it out side of a tax bracket %.

 

[CanadianIrish]

There are a couple of reasons for that.

1. The temporary cut for medicare and social security taxes played a HUGE roll. Take a look at this graph. As you can see, the drop in employment during the recession (gray bar) definitely slowed down the growth of employment tax receipts. However, once the payroll tax holiday was implemented in 2011, you see the drop in receipts. This drop in 2011 coincided with GDP growth. A double whammy when you are measuring receipts as a % of GDP.

2. Loss carry forwards. With the huge amount of losses some accumulated during the market drop, many sold to be able to record the loss. Since these losses can offset gains in the future, the increase in the market has not generated the same amount of revenue on investment income.

3. Corporate income tax receipts as a % of GDP is low compared to historical standards. But, this has more to do with bonus depreciation and loss carry forwards. This is well documented here. Tax Break Pushes Corporate Taxes to Just 12.1% of Profits, Lowest Level in 40 Years - WSJ.com

So, yes, revenues are low. But there are many reasons for it out side of a tax bracket %.

Revenue as a share of GDP started dropping in 2001, your responses only deal with the period from onwards. It is a simple fact that revenues are lower than since 1950 and dropped hugely during the Bush presidency. It's also a simple fact that discretionary spending has decreased hugely since 1970.

Obviously there are complicated issues to address, but my point was that people in this thread are resorting g to slogans rather than facts and are saying things that simply aren't true.

 

[chicago51]

That's not true. Tax revenue as a portion of GDP is lower than normal. It is typically over 18% of GDP and has been around 15% since 2009 and has been on a downward trend since Bush (went from 20.6% in 2000 to 15.1% in 2009). Revenue as a percentage of GDP hasn't been this low since 1950.

That's not to say there isn't a spending problem, because there is. But saying there isn't a revenue problem is simply not true.

Exactly and Obama never said he was opposed to more cuts. He doesn't want to hurt the middle class or senior with said cuts. He has already said he wants a balanced approach to deficit reduction. Balanced? What is wrong with that?

So far since 2011 we have cut 2 trillion and added 600 billion in revenue. We saved 500 billion in interest. We need about 1.5 to 2 trillion more deficit reduction to stabilize our deficit in terms of GDP percentage. All figures I mentioned are over a ten year period. So for example the new taxes get 60 billion more in revenue over 1 year and 600 billion over 10 years. So we need about 200 billion more in deficit reduction per year to be under control.

 

[Ndaccountant]

Revenue as a share of GDP started dropping in 2001, your responses only deal with the period from onwards. It is a simple fact that revenues are lower than since 1950 and dropped hugely during the Bush presidency. It's also a simple fact that discretionary spending has decreased hugely since 1970.

Obviously there are complicated issues to address, but my point was that people in this thread are resorting g to slogans rather than facts and are saying things that simply aren't true.

Again though, it's not that simple. Look at how the sources of revenue changed since WWII. For example, if you remove estate and excise taxes from the 50's and early 60's, we did not have receipts consistently above 15% of GDP until the mid to late 60'5. Even then, it was the growth in the employment taxes that did it and that was because they raised they maximum earnings by 38% and increased the tax rate by about a half of percent.

In fact, I think that chart says it all. Personal income tax collections as a % of GDP has been consistently in the 8% range. This only changed dramatically in the mid 90's as the tech bubble started to take root. According to department of Treasury, starting in 1996, each year was a record year for collecting taxes on capital gains. This peaked in 2000, which was nearly 3X what was collected in 1994. In 2001, the taxes collected declined by nearly 50% and declined again in 2002 by about another 25%. It took us until 2005 to reach the levels of claimed gains of 2000 (recorded gains, not tax revenue). In 2009, the level of claimed gains was the same as 2002. This has a huge impact on overall tax collections. Once we got back to a more normalize amount of gains claimed, the % of personal income taxes as a % of GDP returned to the 8% range in 2006.

These all have a big impact on what you are saying. I don't think revenue is as big of a problem in the sense that without the payroll tax holiday and bonus deprecation. The payroll tax holiday accounted for a loss of 1.1% of GDP. Couple that with other corporate tax incentives and higher unemployment, it is easy to see how we got in this situation.

 

[MJ12666]

Since you are obviously follow this closely can you please briefly summarize exactly what programs were cut by $2 trillion.

Additionally, regarding getting things under control, you do understand that we currently are running a deficit of over $1.1 trillion per year. So the additional $60 billion a year in additional revenue reduces the yearly deficit from $1.1 trillion to $1.0 trillion. That is correct, basically a rounding error or otherwise meaningless.

Finally, since we are adding an additional $1 trillion per year to our national debt (not paying any debt off) can you please explain to those of us that are financially challenged how we can possibly be saving $600 billion in interest payments over the next ten years?

 

[chicago51]

Since you are obviously follow this closely can you please briefly summarize exactly what programs were cut by $2 trillion.

Additionally, regarding getting things under control, you do understand that we currently are running a deficit of over $1.1 trillion per year. So the additional $60 billion a year in additional revenue reduces the yearly deficit from $1.1 trillion to $1.0 trillion. That is correct, basically a rounding error or otherwise meaningless.

Finally, since we are adding an additional $1 trillion per year to our national debt (not paying any debt off) can you please explain to those of us that are financially challenged how we can possibly be saving $600 billion in interest payments over the next ten years?

Hard for me to post exact info using my smart phone. I'll summarize. The 1.4 trillion in cuts came from the debt ceiling default scare in 2011. A lot of cuts were to state grants and minor and I mean very minor defense cuts. We need more defense cuts for sure we spend as much on defense as the next 13 countries combined. BTW default should be off the table no matter your party or beliefs.

Going to check my interest figure but i believe 500 billion saved is about right. You have to take into account the total debt not just the deficits when figuring interest. If we can shave 2 trillion off the ten year deficit the debt will still be rising but at a rate less than our GDP.

 

[Buster Bluth]

We need more defense cuts for sure we spend as much on defense as the next 13 countries combined. BTW default should be off the table no matter your party or beliefs.

Us and our allies make up something like 80% of military spending.

Not only that, but we are the only country that can actually move an army. Even if there was a war with China, their 2.5mil-man army is useless because they can't move it or supply it.

Then there's the reality that Ron Paul laid out a few years back--WE CANNOT BE INVADED. We control all of the oceans. Naval wars have are fought by air craft carriers, take a look at who the world's naval carriers belong to:

Is anybody else scared of war? The US hasn't lost a conventional battle between armies since when, the Korean War? Nobody wants to **** with us. Not only that, there is no one to fight.

30% cuts, minimum.

Going to check my interest figure but i believe 500 billion saved is about right. You have to take into account the total debt not just the deficits when figuring interest. If we can shave 2 trillion off the ten year deficit the debt will still be rising but at a rate less than our GDP.

...assuming everything goes to plan like the CBO laid out. How often does that happen?

 

[chicago51]

Buster is that graphic yearly spending or decade spending? If it is yearly a 30 percent cut may be enough to at least stabilize the deficit.

Then its about improving the economy. Getting people off of food stamps which don't give you very much anyway and unemployment insurance instead having them working and paying taxes is the key to reducing the deficit. It is impossible to reduce the debt without a rocking economy.

 

[Buster Bluth]

Buster is that graphic yearly spending or decade spending? If it is yearly a 30 percent cut may be enough to stabilize our deficit.

I would cut the military by 30% literally tomorrow. I'd close hundreds of bases around the world, or at a minimum transfer them to NATO control. It's time France, Germany, etc stepped up to protect the free world. We can get the hell out of Korea and Japan too, they have enough money to support themselves.

Then its about improving the economy. Getting people off of food stamps which don't give you very much anyway and unemployment insurance instead having them working and paying taxes is the key to reducing the deficit.

The problem there is that the US hasn't even realized how to "improve the economy." Our stimulus bills are nothing more than handouts to construction unions to build roads we don't need and definitely shouldn't be building.

 

[drayer54]

30% defense cut! Like that will fly! Too many dependents in congressional swing districts, like Virginia.

These projects getting cut will have a huge impact on certain companies and areas, but it might be needed.

Red side of the house doesn't like to make cuts in this area either.

 

[Buster Bluth]

30% defense cut! Like that will fly! Too many dependents in congressional swing districts, like Virginia.

These projects getting cut will have a huge impact on certain companies and areas, but it might be needed.

Red side of the house doesn't like to make cuts in this area either.

Duh. That doesn't mean it shouldn't happen.

 

[CanadianIrish]

Again though, it's not that simple. Look at how the sources of revenue changed since WWII. For example, if you remove estate and excise taxes from the 50's and early 60's, we did not have receipts consistently above 15% of GDP until the mid to late 60'5. Even then, it was the growth in the employment taxes that did it and that was because they raised they maximum earnings by 38% and increased the tax rate by about a half of percent.

In fact, I think that chart says it all. Personal income tax collections as a % of GDP has been consistently in the 8% range. This only changed dramatically in the mid 90's as the tech bubble started to take root. According to department of Treasury, starting in 1996, each year was a record year for collecting taxes on capital gains. This peaked in 2000, which was nearly 3X what was collected in 1994. In 2001, the taxes collected declined by nearly 50% and declined again in 2002 by about another 25%. It took us until 2005 to reach the levels of claimed gains of 2000 (recorded gains, not tax revenue). In 2009, the level of claimed gains was the same as 2002. This has a huge impact on overall tax collections. Once we got back to a more normalize amount of gains claimed, the % of personal income taxes as a % of GDP returned to the 8% range in 2006.

These all have a big impact on what you are saying. I don't think revenue is as big of a problem in the sense that without the payroll tax holiday and bonus deprecation. The payroll tax holiday accounted for a loss of 1.1% of GDP. Couple that with other corporate tax incentives and higher unemployment, it is easy to see how we got in this situation.

There is a revenue problem plain and simple. You're citing different tax cuts as being the source of the problem, but there is a very clear revenue problem. Even if you eliminated all non military / interest discretionary spending there would still be a deficit. There has to be an increase in revenue.

At all levels of government the US takes in 27% of GDP as revenue. That is the lowest in the Western world by a huge amount. Numbers in other noteworthy countries are: Britain 39%, Canada 32%, France 45%, Germany 41% ... Even tax havens like Switzerland are higher (30%).

The US has to decide if it wants to be a Western country and offer the same government services every other Western country does. If they do, they have to increase revenue.

 

[BobD]

We can't cut military spending now. If all else fails we have to retain the ability to take whatever we want.

 

[drayer54]

I would cut the military by 30% literally tomorrow. I'd close hundreds of bases around the world, or at a minimum transfer them to NATO control. It's time France, Germany, etc stepped up to protect the free world. We can get the hell out of Korea and Japan too, they have enough money to support themselves.



The problem there is that the US hasn't even realized how to "improve the economy." Our stimulus bills are nothing more than handouts to construction unions to build roads we don't need and definitely shouldn't be building.

Troop reduction is already underway. We'll never get that much though. No president has been brave enough to give up our footprint abroad either.

 

[drayer54]

We can't cut military spending now. If all else fails we have to retain the ability to take whatever we want.

Excellent precedent to establish (or continue).

 

[Ndaccountant]

There is a revenue problem plain and simple. You're citing different tax cuts as being the source of the problem, but there is a very clear revenue problem. Even if you eliminated all non military / interest discretionary spending there would still be a deficit. There has to be an increase in revenue.

At all levels of government the US takes in 27% of GDP as revenue. That is the lowest in the Western world by a huge amount. Numbers in other noteworthy countries are: Britain 39%, Canada 32%, France 45%, Germany 41% ... Even tax havens like Switzerland are higher (30%).

The US has to decide if it wants to be a Western country and offer the same government services every other Western country does. If they do, they have to increase revenue.

Well, I was merely trying to highlight the why of the revenue side. In your previous posts, you said the % had been declining since Bush and was under the historical norm. I was trying to point out that this was a problem far exceeding income taxes, which is what one side uses as talking points.

You are right, for the promises made, the revenue is not ample enough as it stands today. You are also correct that a decision needs to be made on the direction of the country.
However, our size and diversity across this country makes it much more difficult to implement broad social programs like Eurozone countries without really risking growth, which is the only thing that can bail us out of our current problem.

 

[CanadianIrish]

Well, I was merely trying to highlight the why of the revenue side. In your previous posts, you said the % had been declining since Bush and was under the historical norm. I was trying to point out that this was a problem far exceeding income taxes, which is what one side uses as talking points.

You are right, for the promises made, the revenue is not ample enough as it stands today. You are also correct that a decision needs to be made on the direction of the country.
However, our size and diversity across this country makes it much more difficult to implement broad social programs like Eurozone countries without really risking growth, which is the only thing that can bail us out of our current problem.

Fair enough. I definitely don't entirely agree with what you're saying about the reasons for revenue declines under Bush. The payroll tax holiday hurts, but that's recent. In 2004 personal income was the lowest as a percentage of GDP since 1951. You pointed to lower capital gains revenue, but cg tax rates were dropped in 97 and 03. I don't see how gains themselves (rather than cg revenue) could be down so much 5 years after the dotcom bubble.

The problem s that you need a balanced approach, and you have to grow out of the problem, so any cuts that will hurt the economy need to be avoided. That's brutally hard to do and will require very careful consideration.

 

[chicago51]

We have both revenue and spending problem. Rather you believe we had a surplus or not you can say our debt was under control in the 90s when Clinton and Newt Gingrich had a smaller military budget than we do now.

If we keep making cuts domestically we will harn the economy and raise the deficit.

The economic stimulus was a good idea but was terribly put together. If you want to invest to improve the economy we need to invest 2012 type projects not 1950s type things.

From a revenue standpoint now that we raised taxes on the rich we need tax reform. We got to take away unfair tax deductions and we have to put an end to these off shore tax havens in camen islands and other places.