Wednesday, November 17, 2010

F'ing With Taxes Won't Fix Anything

As I clarified in my last post, spending is one side of the federal deficit equation.  This post will cover the other half:  taxes and tax reform.  Normally when I mention fixing taxes, or anything remotely mentioning taxes, I get on my soapbox and hype the FairTax.  The prior link is where this ends....

It's something that, as I wrote my prior post about spending being the problem with the ballooning deficit. I was sure that I'd need to write this post explaining why even passing the FairTax would not fix the problem.  In fact, I mentioned as much (and was promptly ignored).

What crystallized  this most specifically over the last week was an interactive from the New York Times.  What I did with it was go through the list and look what I could cut in spending first.  Not surprisingly, most of the savings in the long term (most of the trillion) came when cutting Medicare and Social Security.  And since 1. the cuts in spending came before the tax increases and 2. the FairTax was not mentioned, I ended up going with only spending cuts.  And it "solved" the problem.

Here's my solution.

Now, to be fair, I did run through the tax cuts, and found I could also "solve" the problem by taxing the shit out of everyone.

Note the quotes on the word "solve" in both cases.  This is because, in the case of the taxes, raising taxes simply feeds more money to the government, and on the spending front, very few in the federal government have the will to cut all the things on the list.  And since raising taxes to levels that would theoretically wipe out the deficit would also cripple businesses, people, investments, and the whole damned economy.

That brings us to the current tax dilemma:  the Bush-era tax cuts.  I think I can be clear on what needs to be done.  Since the Democrats still control much of Washington, tax cuts to stimulate the economy and maybe pull us out of the post-recession slump are out.  And real tax reform is still out.  I can live with that for now, because the real problem to address is spending. 

But the financial suicide of raising taxes (and letting the tax cuts expire is raising taxes) on anyone when we're all crunched for cash sure as shit won't help the economy, and will be an even more symbolic measure than the earmark moratorium (and stupid as well).

Oh, and one other point, it is NOT a tax cut when you don't change the existing rate.  And it's not a spending cut when you decrease the amount of the increase.  And anybody that says otherwise doesn't know what math is and/or reads and believes too much MoveOn bullshit.

It's called tax neutrality, and that's the only reasonable compromise.


Lista said...

Very Good Post Patrick. I Couldn't have Said it Better myself.

Toad734 said...

Actually, the largest expenditure is Defense and defense/Empire related costs...Then Social Security then Medicare and Medicade. What you aren't saying though is that what we are bringing in in Social Security taxes accounts for 42% of our receipts yet corporate taxes only account for 7%. And if the rich payed the same progressive rate on SS taxes as you and I paid we could make SS tax receipts hit about 50% of all incoming revenue and thus the conversation about SS entitlements and it's going to run out of money would be over.

Why would you leave out defense? Seeing as how we spend more on "defense" than Russia, China, Iran, Venezuela and Syria combined and that the 2 largest air forces in the world are the US air force then the US Navy, don't you think that's a department that's a bit bloated since we are fighting guys in caves with spent shell casings and box cutters??

You cut "defense" in half, make health care cheaper and make the rich pay what I pay in SS taxes plus maybe decriminalize pot and our problems are solved.

Toad734 said...

By the way, no one is proposing we raise taxes on people who are crunched for cash, we are only proposing letting tax cuts expire for people who could literally be crushed by their own cash. Stop making shit up. I can assure you that Steve Jobs and Paris Hilton and Lindsay Lohan are not "crunched for cash".

Lista said...

Technically, Social Security is not a Tax, but an Insurance Plan, for the Sake of Assuring that there will be at Least Some Money Available in Old Age. At Least it was Supposed to Offer that Assurance. What you Appear to be Suggesting is that we Should Treat it more like a Tax, rather than an Insurance Plan; Collected Unequally and then Distributed more Equally.

Obama has already Cut Defense.

I Keep Hearing that a Large Percentage of these so called "Upper Income" Earners are Small Businesses, not Millionaires.

I Guess the Newest Thing is a Federal Sales Tax that is Going to Really Hurt a lot of People with Low Income.

Toad734 said...


It is a tax, it comes out of my paycheck very week just like State taxes, Federal Income taxes and FICA taxes. You misunderstood me, I said I want it COLLECTED EQUAllY!! That's my point. As it is today, it is collected unequally. I pay a far higher percentage of SS tax than Bill Gates or any other rich people because after $106,000 the rate does not increase. I don't make $106,000 but if I did, I would pay the exact same amount of SS taxes as Steve Jobs and Bill Gates where as I pay a far lower FICA and Income tax than they would. SS tax is a regressive tax. So you had it backwards, I want everyone to pay the same rate at least, perhaps even having Bill Gates pay more than what I do.

How much has Obama cut defense?? Not by much, not like Clinton did which balanced the budget. Of course now that we are winding down from Iraq and Afghanistan we will be spending less than we have over the last 10 years but that isn't enough. We don't need bases in 160 countries, we don't need an Empire, we don't need to have the two largest air forces in the world.

You are being lied to. Only 2% of small business owners earn over $250,000 per year. Most small businesses earn less than that.

No one will be "hurt" if these tax decreases for the rich expire.

Yes, if a Federal Sales tax is enacted it will hurt the poor more than anyone else. Which is why we shouldn't take money from those who don't have any and take it from those who do, who have benefited from being an American the most and who are the very people who get to write our laws, become congressmen themselves or contribute to the candidates who make the laws for them...You know, the guys who get the most, should pay the most.

dmarks said...

Toad, you always say we are being lied to, and you prove the point.

"Not by much, not like Clinton did which balanced the budget"

Clinton never balanced the budget. How can you continue this lie? Check the month to month budget numbers I gave you. The debt kept increasing. No surplus or balance.

"No one will be "hurt" if these tax decreases for the rich expire. "

Perfect example of being lied to.

"You know, the guys who get the most, should pay the most."

They do right now, and they would even under a fairer, flatter tax. So why rock the boat and push for an unnecessary tax increase?

As for SS, it is a tax. Nothing more, nothing less. The money goes into a federal slush fund that gets raided, so it is used like any tax money.

Any idea how much money we could save if we only paid SS and Medicare to the poor, needy, disabled?

There's a huge percentage of spending of welfare for the well-off here.

Lista said...

A "Progressive Rate" is not an Equal Rate. "Progressive" Means a Higher Percentage Taken from the Rich than from the Poor. Equal would be a Flat Tax, which I do not Particularly Agree with, but that is what an Equal Tax System is.

And just Because Social Security is Taken from your Pay Check Does not Make it the Same as Taxes. The Difference is that those who Pay more, Later Receive more. What you Get Back Later Depends on How much you Paid in, so it is an Individual Thing, Unlike Taxes which are Taken and then Spent at the Government's Discretion. At Least that was how it Originally Worked Until the Government Used the Funds Inappropriately, Leaving the Fund Nearly Empty, due to the Government's Misuse of it.

Perhaps when you Said "Progressive Rate", that was a Misprint, but that is what you said.

Social Security was not Originally Meant to be a Tax. The Government May be Treating it that way, but it was not Originally Set Up that Way and this is the Reason why it is given to the Rich as well.

If we want to Make it a Tax, I might not Even be so much Opposed to that Idea, yet the Rich Feel Like they were Lied to because they were at One Time Told that what they Paid in was going to be Preserved for them Personally because it was not actually Treated as a Tax when it was First Set Up. I Thought this was Common Knowledge, but Apparently not.

Perhaps if the Rich, or for that Matter, the Middle Class had been Told more Honestly that Social Security was Eventually going to be Treated more Like a Tax than a Personal Insurance Plan, they would have Planned Better for their Own Retirement.

Lista said...

And Anyway, this Post was about Spending, so why are we still Talking about Taxes?

dmarks said...

Spending is the real issue. Thanks in part to the Bush tax cuts for all taxpayers, we have huge amounts of money coming in. More than enough for the actual needs of the nation.

Toad734 said...

Here we go again with Dee who doesn't believe Clinton created a budget surplus...It's not even worth my time...You do realize there is a difference between debt and deficit right??


For SS, I would settle for a flat tax or one rate for all. That would be a start.

I just saw my Mom's SS statement, what she paid in, she will get back. I get the same statement every year. So yes, it is sort of a savings account for people who have worked(and paid into SS) for 40 quarters.

Yes, the government has always borrowed from SS to fund wars, give tax breaks to the rich and provide red state farm subsidies.

dmarks said...

"Here we go again with Dee who doesn't believe Clinton created a budget surplus...It's not even worth my time..."

Make it worth your time. Didn't you read the earlier message with actual budget figures? There never WAS a surplus. How can one 'believe' in one when the debt kept going up?

"You do realize there is a difference between debt and deficit right??"

You don't, obviously. Check into this and get back with us, of course?

"Yes, the government has always borrowed from SS to fund wars, give tax breaks to the rich and provide red state farm subsidies"

No need to raid anything to fund wars. Defense is a necessary Constitutional function of the government. And you are lying about giving tax breaks to the rich:

1) the breaks go mostly to the non-rich.

2) The breaks result in more money coming in, so they have a positive impact on budget problems.

Lista said...

No, I did not Automatically Realize the Deference between Debt and Deficit. I had to Look it Up, yet now that I've done so, if the Government Borrows Money in Order to Fix the Deficit of what they Need in Order to Fulfill the Budget, then the Deficit will soon become Debt.

Sure the Problem can Also be Fixed by Adjusting the Budget and Addressing the Excessive Spending and yet this is what the Government is so Very much Unwilling to do.

The Reason that I do not Believe in the Flat Tax is because I do not Believe that the Poor can Afford it. I Prefer Huckabee's Fair Tax because at Least the Poor can be Given a Little Bit of a Break if the Things that are Purchased that are Necessities are not Taxed. Since Necessities are such a Large Percentage of the Poor Man's Budget, not Taxing them gives the Poor a Significant Tax Break.

Knowing that there were a Large Number of Baby Boomers who would all Reach Retirement at the Same Age, it was a rather Serious Misjudgment for the Government to Borrow as much as they did from this Fund.

Thanks again for your Responses to Toad. I Find that I Agree with you Often.

dmarks said...

Also, there is no need to "borrow" to quite simply refuse to steal as much from people.

Besides, most of the people involved in the tax-cuts are the nonrich. The Dems are holding the whole thing hostage in a pathetic attempt to score 'class warfare' points.

Toad734 said...


Clinton created a budget surplus out of the Reagan Bush deficit. End of story,. Again, learn the difference between debt and deficit. The debt will never go away until we get rid of the Federal Reserve.

And like I said in the previous post, when Reagan cut taxes dramatically on the rich, what happened?? We went further into debt and our deficit grew. When Clinton raised taxes on the rich (wealthiest 1.2% AKA NOT YOU OR ANYONE YOU KNOW OR WHO WILL GIVE YOU A JOB), our debt shrank and we created a budget surplus of $237 Billion, when Bush cut taxes we created yet another record amount of debt and another budget deficit.

Those are the facts on any other planet where Obama isn't a Kenyan, Communist, Bush was a genius, invading other countries eliminates terrorism, torture gets you the right information, gays will try to fuck you in the fox hole during a fire fight, and you fight deficits with tax cuts....ON that planet however...


You may like what Dmarks says just as you may like it when I say there is a winning lottery ticket under your pillow and Prince Harry seeks your hand in marriage but that doesn't make it true.

dmarks said...

Toad said:

"Clinton created a budget surplus out of the Reagan Bush deficit."

Check the treasury figures. Clinton ran a constant deficit. I gave you the links. why keep lying?

"Again, learn the difference between debt and deficit."

Practice what you preach. AGAIN: deficits mean increasing debt over time. Surpluses mean decreasing debt over time. Under Clinton, the debt always increased. How is this so hard to understand?

"And like I said in the previous post, when Reagan cut taxes dramatically on the rich, what happened??

Actually, the rich were a small minority of the people Reagan cut taxes for.

"We went further into debt and our deficit grew. "

Learn to do some research. Check into the incoming revenue during this period. It got a lot bigger. So the tax cuts made things a lot better.

"When Clinton raised taxes on the rich (wealthiest 1.2% AKA NOT YOU OR ANYONE YOU KNOW OR WHO WILL GIVE YOU A JOB),"

Clinton's greedy tax hikes affected most Americans.

"Bush was a genius, invading other countries eliminates terrorism,"

Actually, he's a lot smarter than the guy in office now, and Bush is certainly way smarter than Biden too. And the second part is very true: retaliating against terrorist countries and eliminating the root cause of terrorism works.

"torture gets you the right information,"

The sad truth is, the waterboarding (supported by Nancy Pelosi too) got a lot of valid information.

Lista said...

"Again, learn the difference between debt and deficit."

You Keep Saying that, but you are not Willing to Tell Us how you would Define it. Dmarks is the Only One who has been Going to the Trouble to Define it.

Toad734 said...

Someone please enlighten these people what the hell I am talking about!!! Patrick??? You know the difference, they won't believe me because...I read or something... Or don't believe in the baby Jesus...I don't know. It isn't about how I define anything. Debt is debt, a budget surplus is a budget surplus and or a budget deficit is a deficit. Debt already implies "deficit"...Not that you can have a surplus in debt.

Its like this:
Your credit card debt is your debt. You can choose to pay it off or pay a minimum balance. You also have a budget that consists of all your other living expenses that have to be paid (or they take your house/car and you go hungry) and you also have income. If you are spending more on expenses than you make, and then borrowing money or using your credit card to pay off your bills, you are running a budget deficit but if you earn more than what you spend, you have a budget surplus, regardless of the amount you may owe on credit cards or your car payment. Even if you have $5 in credit card debt, owe $15000 on your car and $190,000 on your house, your can still run a budget surplus because all that money is not due at the end of the month. That's what Clinton balanced. He was bringing in more revenue than he was spending (aka he made more than he spent), but that doesn't mean he paid off the house, car and credit card that the children ran up when you were out of town for a couple years (That would be Reagan).

I never said Clinton erased our debt, I said he balanced the budget and created a surplus. Bush started spending more and collecting less and therefore started running a budget deficit which then caused him to break out the credit card and increased debt as well.

If you don't understand that, I am no longer going to explain it to you because you are obviously incapable of comprehending.

Clinton did slow the increase in debt but Bush and Reagan were the ones who really increased the debt at faster paces than any other time in history. But it's hard to ever erase debt when you have to pay interest on your own money that is being printed.But Clinton also decreased the amount of new debt, which again, Reagan and both Bushs increased new debt...Just as Republicans always do.

You are being lied to!

Toad734 said...

I meant $5k in credit card debt...Not that it makes a difference either way as the point is the same.