Good Fun Going Over The Fiscal Cliff

[Bleyseng]

60 million Americans and I agree with President Obama that taxes should go up at least to Clinton years rate for those making more than a quarter million dollars
Colin

In 2000 the top tax rate was 39.6%. That was for income of 288,350 and above.
288,350 in 2000 dollars is equal to 371,870 in 2012 dollars. So that top tax rate would hit a lot more people than it did during Clinton's time.
It seems that Obama and the media want to make this comparison to the Clinton years, but what really is/was proposed with the 250,000 income level is a substantial increase in the number of taxpayers included in the top rate.

Sounds good to me! squeezing a rock (middle and poor class) vs the people who CAN actually pay for it makes sense to get more revenue.

[Amskeptic]

60 million Americans and I agree with President Obama that taxes should go up at least to Clinton years rate for those making more than a quarter million dollars
Colin

In 2000 the top tax rate was 39.6%. That was for income of 288,350 and above.
288,350 in 2000 dollars is equal to 371,870 in 2012 dollars. So that top tax rate would hit a lot more people than it did during Clinton's time.
It seems that Obama and the media want to make this comparison to the Clinton years, but what really is/was proposed with the 250,000 income level is a substantial increase in the number of taxpayers included in the top rate.

I did not say "restore the Clinton schedule and percentages at each bracket", I said that I agreed with Obama's plan that tax rates should go up to the Clinton years rate (39.6%) on those who make 250,000.00 NOW.
And the reason I think 250,000.00 is a decent spot to kick in the top rate, is the fact that their incomes went UP UP UP during the recession.
"Obama and the media" ??
Colin

[Amskeptic]

On a NYT blog:

In 2008 the Australian Treasury calculated the projected hole in the economy - apparently to the last dollar. The Federal government took Treasury's advice and immediately threw cash at that projected hole.
Wasting no time it posted $1000 checks to Australian households with a request that the recipients 'spend the money NOW, no questions asked but whatever you do PLEASE DO NOT SAVE IT nor use it to pay down debt. '

It then gave every school in Australia - public and private - cash for new buildings with the proviso that the work commence in 2009. The government was not worried about receipts or strict stimulus accounting, it just took it as read that there would be waste but that was correctly deemed insignificant to the task at hand.

Tax cuts were not included in the stimulus as they have a low stimulatory effect.

What happened?

No recession and Australia's Federal Budget will be the first in the OECD to return a surplus.

Now, if we add up the blood-letting in this country since the Wall Street Heist, we could have fired off a check for $20,000.00 to each American citizen and there would be no recession now.

[yondermtn]

The $400,000/450,000 income ultimately agreed upon is much more appropriate.

[Amskeptic]

The $400,000/450,000 income ultimately agreed upon is much more appropriate.

Can you provide a reason? I honestly think "appropriate" is somewhere else entirely, and my reason is that this country has gotten so screwed up in its definitions of "appropriate" that we cannot see the hardships we visit upon our fellow Americans from the cushy comfortable vantage points of our self-justified morally torpid comforts that we have forgotten actually come from e-x-p-l-o-i-t-a-t-i-o-n of both resources and people, so I really need to know why 400 friggen thousand dollars a YEAR is the point below which we cannot restore the tax rate a pathetic 3% to 39%?? It's not like the poor don't pay a higher percentage for sales taxes, bank fees, a roof over their heads, and food, but screw them, we're cutting their futures off at the knees so the wealthy can watch their incomes continue to skyrocket not because they have done anything so superior recently (and they haven't! they have made disastrous decisions in the board rooms at Bausch & Lomb, Kodak, HP, General Motors, Entegy, Glaxo Smith Kline, Halliburton, Hostess, Sun Beam, Lehman Brothers, Firestone, Motorola, K-Mart/Sears, etc) but because they do NOT give a rat's a$$ about their fellow Americans and you can quote me on that. What is appropriate?
How about saving this country by taxing those who can afford it so we can invest! in the future! What is appropriate? Is the current LOWEST REVENUE PERCENTAGE IN SIXTY YEARS an appropriate place to be after those horrendous wars and pharma give-aways while we need to compete against the rest of the world not in the race to the bottom of the wage scale, but perhaps in the realm of excellence and science and innovation?? Just askin'

[hippiewannabe]

Cutting defense 10% would be something, maybe repair a few bridges, but it won't make a dent in the deficit.

Agreed. A 10% cut in defense spending would free up $70B. The budget deficit was in the order of a thousand billion last year.

http://www.reuters.com/article/2012/10/ ... 7620121012

America persists in spending more than it earns. We can all agree, this is unsustainable.

So, hippiewannabe, what's your plan for reducing this number?

Start with recognition of the simple, irrefutable economic law that when you tax something, you get less of it. Making income and producing economic activity is a good thing, which should be encouraged, not viewed as evil.

What everyone, conservatives and liberals, should agree on is that burning oil is a bad thing. It can be discouraged through taxation, which would also raise revenue. Burning oil produces greenhouse gases, hurts the trade deficit, requires military spending to keep the Straights of Hormuz open, and gives money to people that fund terrorism. A $1 per gallon tax on petroleum products would be fraction of what many countries have, and raise more money than the recent income tax increases. It would slow down suburban sprawl, and make public transit more attractive. We could eliminate one or two aircraft carrier battle groups, saving several $billion more.

Of course, the elephant in the room remains the $48 trillion in unfunded liabilities promised by SS and Medicare. You could take all the income from all the wealthy and it wouldn't touch it. SS and Medicare were created when few people lived till 70, and there were no $80,000 operations and $5,000 per dose medicines. There is nothing for it but reducing benefits.

[glasseye]

So, hippiewannabe, what's your plan for reducing this number?

A $1 per gallon tax on petroleum products would be fraction of what many countries have, and raise more money than the recent income tax increases.

Wow. When you add all the subsequent effects, that's a heck of a bite. No more free SuperSaver shipping for my Amazon purchases. I think a $1 per gallon tax would cause America's economic engine to slow too much, but I do sympathize with your strategy. While I agree that Americans are still paying far less (relatively) than the rest of the world for fuel and that evening out that difference would be a good thing, taxing everybody at the same absolute rate is disproportionately unfair to lower income families and individuals. Leonardo DeCaprio celebrated two Happy New Years last week. Once in Sydney Harbour and once in Las Vegas. Courtesy of his own jet. Is it fair that he pays the same $1 a gallon tax as a single parent mom commuting between her two jobs?

Of course, the elephant in the room remains the $48 trillion in unfunded liabilities promised by SS and Medicare. You could take all the income from all the wealthy and it wouldn't touch it. SS and Medicare were created when few people lived till 70, and there were no $80,000 operations and $5,000 per dose medicines.

Why not copy most of the rest of the West and implement a national health plan? It works everywhere else. Why not in the USA? Oh, wait. That's socialism. Our SS and Health plans are solvent for the foreseeable future and I don't believe Canadians pay incredibly more tax than Americans overall. We even have flat screen TVs.

There is nothing for it but reducing benefits.

Or continue to inflate your currency. Which I like. I live near the border. Currency inflation is an insidious, nearly invisible form of tax that's visited on Americans every day, but it makes my SuperSaver Amazon purchases ever cheaper. That ain't fair either.

[Amskeptic]

Start with recognition of the simple, irrefutable economic law that when you tax something, you get less of it. Making income and producing economic activity is a good thing, which should be encouraged, not viewed as evil.

Taxation is currently viewed as evil. But historically, we have been taxed at a far greater rate by solid Republican presidents like Eisenhower and people were *not* screaming bloody murder about communism and socialism and deadbeat hand out welfare addicts. The simple irrefutable law that taxation makes you get less of it has been disproven, particularly with this Bush tax cut corollary, where tax cuts gave us very little bang for the buck and absolutely no increase in tax revenues like was promised through "greater economic activity".

What everyone, conservatives and liberals, should agree on is that burning oil is a bad thing. It can be discouraged through taxation, which would also raise revenue. Burning oil produces greenhouse gases, hurts the trade deficit, requires military spending to keep the Straights of Hormuz open, and gives money to people that fund terrorism. A $1 per gallon tax on petroleum products would be fraction of what many countries have, and raise more money than the recent income tax increases. It would slow down suburban sprawl, and make public transit more attractive. We could eliminate one or two aircraft carrier battle groups, saving several $billion more.

Agreed.

Of course, the elephant in the room remains the $48 trillion in unfunded liabilities promised by SS and Medicare. You could take all the income from all the wealthy and it wouldn't touch it. SS and Medicare were created when few people lived till 70, and there were no $80,000 operations and $5,000 per dose medicines. There is nothing for it but reducing benefits.

Disagreed.
Again, Social Security can be fixed instantly. It is its own free-standing plan. Had its trust fund been invested like Gore suggested back when we had a surplus instead of spent on general operations, we would have had compounding interest helping it to stay ahead of the curve. We can raise the cap to a million dollars and push out the viability long enough to swallow the Baby Boomer hit.

Medicare needs a single-payer health care system with true market forces allowed to bear on the price of pharmaceuticals. I am all for cost reductions borne by the providers. There is no excuse on Earth that people should go bankrupt for medications that you can buy from a vet for a thousand percent less. Look at big pharma whine about the cost of bringing medications to market, yet they blow millions on advertising and lobbying to subvert capitalism.
Colin

[hippiewannabe]

.. While I agree that Americans are still paying far less (relatively) than the rest of the world for fuel and that evening out that difference would be a good thing, taxing everybody at the same absolute rate is disproportionately unfair to lower income families and individuals. Leonardo DeCaprio celebrated two Happy New Years last week. Once in Sydney Harbour and once in Las Vegas. Courtesy of his own jet. Is it fair that he pays the same $1 a gallon tax as a single parent mom commuting between her two jobs?

Not everything has to be progressive, sometimes an equal rate is fair. DeCaprio would pay an extra $7000 to fly from Sydney to Vegas on New Years Eve, while the lower income worker commuting 15 miles each way to work in her Focus would pay $5 more per week.

Don't even get me started about that pompous liberal hypocrite showing up at the Oscars in a made-in-Japan Prius, pretending he gave a shit about the environment or the American working person.

[Bleyseng]

I think raising the highest tax rate even higher than 39% is a good thing for incomes over $250k. Raising the gas tax a $1 sounds good but is pretty regressive as it hits the little guys pocket way more than folks making $250k a year. The additional cost would not only have to be paid at the pump but throughout the economy is increased food production, food transport and business costs (people commuting, shipping, raw material transport).
Closing loopholes for people making over $250k is way easier. Lower limits on mortgage deductions, higher taxes on dividends/capital gains/investment income etc.
Raising the cap on taxable income is something the Dems/GOP must look at to help raise revenue as its just too low at $113k. This is way better than adjusting the age qualification from 65 to 67. There also has to be a cap on benefit qualification based on gross income capping at $100K. Rich retirees don't need this "greens fee" money.

[glasseye]

. DeCaprio would pay an extra $7000 to fly from Sydney to Vegas on New Years Eve, while the lower income worker commuting 15 miles each way to work in her Focus would pay $5 more per week.

But DeCaprio and the single mom would each pay the same $5 more to commute to work. That's not fair.

[yondermtn]

Raising the FICA cap above the current $110,100 is doubtful. There's just too many taxpayers that fall into that category unlike the $250k limit. It's a lot harder to get people to vote themselves a tax increase than it is to vote for an increase on others.
In addition, there is already a limit on the benefits one can recieve, and on top of that, up to 85% of that is taxable for those making higher incomes.

Going back to the increase of the income limit from 250k to 450k for the 39.6% rate. Many taxpayers, especially those in high tax states(NY/CA/etc.), will see no relief because they are caught by the AMT calculation so the marginal rates go out the window. AMT rates are 26% on the first 175,000 and 28% on income above that. Persoanl exemptions and state tax deductions are not permitted in the AMT calculation.