Look at the rapidly approaching opportunity for all of us to do something to help lower the National Debt, stimulate our economy, and/or transfer wealth to the less fortunate. Of course the Liberals are only concerned about the folks who will see the $412/yr to $3540/yr increase, since they are "paying more than their fair share" !!! Whereas they are not too concerned about those that pay most of the Nation's bills and will see a $14,173 increase, "since they are not paying their fair share" !!! (see table in CNN link)
Its hard to even type that with a straight face... I've ball parked my household increase at $500+ per month !!! I wonder what I won't buy, hire done, invest, etc to pay for that?
Remember what Cochrane said about the CBO / Keynesian method. The CBO will likely count the ~$6,000 they lift from my wallet and count it as a ~$9,000 GDP increase... Does that make sense, since I would have likely spent it on something new and shiny with an engine in it? Or on gas for my current high power toys? Or college for my to be Freshman daughter next year?
Thoughts?
CNN $3500 Fiscal Cliff
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Bloomberg CBO Cochrane
FOX News Middle Income: $2000/yr
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18 comments:
The alternative is to put the expenditure on the credit card. The money after all, has already been spent, in the form of promised benefits. Mitt Romney. let's recall would lower taxes on the wealthy, the which would have to be paid for by everyone else. And that's without even getting to the issue of the deficit.
--Hiram
I think the politician's of the past over promised. (hard to believe...) Now what should we do about it? Continue living the dream or face reality.
By the way, social security doesn't seem to be the problem. It seems to the medical side where no one was able to forsee the massive cost increases, technology changes and longer life spans.
It is kind of funny, since I was a child I have been told to ignore Social Security in my Retirement plans because there was a strong chance it may not be there. Apparently many people did not hear that or take it seriously.
This "pay for tax cuts" nonsense has to stop. It assumes that all money belongs to the government first, and that anything they let you keep somehow reduces the amount they have to spend. In this latter they are somewhat correct, in that taxes should only be as high as are needed to fund the necessary and permitted functions of government. Paying for people's health care is not one of those functions, and that is, as noted, ALL of the deficit and about 80% of the unfunded liabilities problem.
When Federal Spending Grew Nearly 12 Times Faster than Median Income,
http://www.heritage.org/federalbudget/growth-federal-spending it is obvious and undeniable that what we have is a spending problem, and the obvious and undeniable solution to a spending problem is to cut spending. It doesn't matter what spending is cut, or what promises were made because spending has to be cut. It's like when the bank cancels your credit card because you've hit your limit-- no choice about cutting, only where to cut. That's why Congress draws their exorbitant salaries, right?
J. Ewing
think the politician's of the past over promised.
Possibly, but they made the promises nonetheless, and they are now coming due. For myself, I just don't see how the argument that we can't afford things is tenable, when we are simultaneously cutting taxes.
--Hiram
"It assumes that all money belongs to the government first, and that anything they let you keep somehow reduces the amount they have to spend."
Let's be very clear on this. It's Mitt Romney who has established the goal that his tax plan must be revenue neutral. Whatever assumptions that may or may not entail, and I am sure they are myriad, are made by Mitt Romney. If you don't like any particular one of them, take it up with him.
We spend money on SS, health care and the military. So why do we say we have a spending problem? I think we have a problem in that we insist on keeping the promises we have made to ourselves, and maintaining national security. Spending is not the cause but the consequence of those decisions. Maybe we do need to take away health care from the old and the young. Maybe we do need to deny them the Social Security they paid for and have a right to. Maybe we need to be less safe in the world. If we want to have that debate let's have it, but let's not have it secondhand by arguing that we shouldn't have to pay for the things we have decided to spend money on.
--Hiram
Isn't it interesting that the obvious answer to a deficit problem, if it is indeed a problem, to raise revenues and cut expenditures, seems to be universally viewed as unacceptable? If the only solution to a problem is worse than the problem, maybe the problem really isn't a problem.
--Hiram
Everyone seems to be voting their personal wallet. Be it to keep their particular benefits/job or to keep the cash in their wallet.
I am not sure anyone is worried about what is best to keep our "Golden Goose" / Country at the top of the food chain. The high position that enables our citizens to live pretty well by comparison.
Or are they? Maybe I am too cynical and this is all about what is best for our children and future Americans...
2 philosophies / methods to attain the same goal?
Thoughts?
Are the Liberals out to fill their pockets by picking the pockets of the successful and wealthy while not earning their compensation?
Are the Conservatives out to fill their pockets by using what our society offers while not sharing enough gains to maintain that society?
Or do both think that what they are asking for is necessary to keep the USA strong, vibrant and successful?
Is it greed or something more?
Here is perhaps a slightly off topic discussion. I have always wondered why a flat income tax rate isn't considered progressive. If, say, we charge everyone a tax rate of 10 percent on their income, higher income people will pay more in taxes right? And how is this just, since rich people get exactly the same services, as poor people? That being the case, why shouldn't every one pay the same taxes, write the same check to the government?
--Hiram
I don't think most people mind paying more when they make more. (ie fixed percentage) I think it is the idea that not only do they have to pay more, but they have to pay at a higher rate because of their hard work and risk taking that frustrates them.
Atlantic Chart
It would be somewhat frustrating and demotivating.
I don't think most people mind paying more when they make more. (ie fixed percentage) I think it is the idea that not only do they have to pay more, but they have to pay at a higher rate because of their hard work and risk taking that frustrates them.
Let's be clear here, a higher marginal tax rate does not mean that taxes are being paid at a higher rate. Mitt Romney paid taxes at 14 percent. It would have been less had he taken deductions he was entitled to. That's far, far less than the highest marginal tax rate on money he would have earned working for a living. Far less than the marginal tax rate probably anyone reading this posting pays.
--Hiram
By the way, elsewhere I have been analyzing the barroom economics analogy occasionally mentioned here. Here is the link to the analog itself: http://kirbythegreat.blogspot.com/2008/01/good-analogy-about-taxes.html
Far from the real world example it claims to be, its a very complicated restatement of a very simple idea, stated pretty well in it's conclusion. That is, tax cuts benefit the rich more than the poor. This seems obvious enough to me, so I wondered why the author of the piece was surprised or disturbed by it. I think it's because he assumed that in a progressive tax system, changes to that system would be progressive as well. That would be consistent, and it makes sense, but that isn't the way things work out. When we increase tax rates evenly in a progressive system, higher marginal income tax earners pay more, or at least at a higher overall rate, that is, the system becomes more progressive. But when we lower rates evenly, the system becomes less progressive, more regressive. This always seemed obvious enough to me, but the author of the barroom analogy seems surprised by it/
--Hiram
The barroom economist assumes that the decision where to live and work is largely if not solely determined by tax considerations. If we assume this is true, isn't it true for the poor as well as the rich? The barroom guy thinks tax changes should be regressive in effect, that is, rich people should be allowed to keep more of their money and poor people should be allowed to keep less of theirs. If this doesn't happen, he argues, the rich will leave. But isn't the reverse true as well? When tax changes that are implemented that require the poor to pay more, won't they be the ones to leave? And returning to the barroom analogy, can the barroom stay in business with only one customer, the rich guy? Won't he then be forced to move to a different bar and I guess start wrecking their business with his arithmetical tricks?
--Hiram
Now don't go jumping from Mitt's average rate to our marginal rates... That's apples and grape fruit.
And yes Mitt's taxes are low relative to other wealthy people. A lot of his money is likely in 401K's, IRA's, Roth IRA's, etc and he is technically retired. (ie no payroll taxes) What is your point? This will be typical for most of us at that point in life. In fact most folks will be much lower. (ie 0% Natl Income Tax)
Bar Room Economics
I don't think the author is surprised at all. I think the author is simply trying to help the liberal minded to understand that the patron paying the most for a similar amount of drink is paying more than their fair share. Which they don't seem to understand or appreciate in real life.
As for freedom of relocation, it typically requires a certain income level to be free to relocate as desired. Just think if the free drinkers had appreciated their excellent situation. All of them would still be happily drinking at the bar.
Besides where would the free drinkers have found another bar where they got their beer for free.
Now you did look at the link to the Atlantic chart, right?
And yet you still think the wealthy aren't paying their fair share?
What is your point?
That Mitt pays lower taxes than people who work for a living. And, by the way, Mitt wants to lower his own taxes, tax cuts that will be paid for by the rest of us.
Mitt Romney wants you to keep less of your money so he can keep more of his.
The conclusion of the barroom economics is stated quite clearly and concisely: "TThe people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier." This seems obvious to me, although it's hard to figure out from the complex and unrealistic analogy that supports to the conclusion. If you believe that the tax code should be progressive, changes should be made consistent to that. But they aren't. Tax cuts are regressive, at least in the way they are usually applied.
As for relocation, lots of factors go into it besides tax considerations. But within the context of the problem, they don't seem relevant. Cost of relocation, one such real world factor, has little application within the world of the analogy because the cost of relocating from one bar to another may not be that significant. And in the real world, the fact is, poor people move a lot.
--Hiram
nThe crucial link in the Atlantic chart is missing. But the IRS figures, I believe, generally impute total corporate income to the individuals when computing effective tax rate. It's also the case that they don't reflect unrealized income, which for most rich people constitutes the bulk of their fortune.
But it is true, that Mitt thinks the taxes on the rich are too high. He wants to lower them and pay for the tax cuts by increasing the taxes on everyone else. Is that far? Do you want to keep less of your income so that the wealthy can keep more of theirs?
--Hiram
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