Catholic Online Forum

I was surprised to learn a simple fact today, weeks after a national election where this issue was a major point of departure between the candidates, and will be a bone of contention in the weeks ahead as the nation again approaches the need to be rescued from a threatening, metaphorical cliff...

The simple fact is this:

The Bush tax cuts for the rich on which there was so much angst, energy, and hand wringing from both sides, for and against, amounts to roughly $80 billion dollars. At our current rate of expenditure, right around $10 billion per day with an estimated $3.5 trillion in spending this year, that $80 billion amounts to about a week to 10 days of federal government expenses.

From that perspective, it seems a lot like rearranging deck chairs. The campaign emphasis, so disproportionate to the reality of the spending problem that confronts us, becomes pure theater, part Greek tragedy, part Roman games, stoking the passions of the mob.

Pax et bonum,

The Bush tax cuts for the rich on which there was so much angst, energy, and hand wringing from both sides, for and against, amounts to roughly $80 billion dollars. At our current rate of expenditure, right around $10 billion per day with an estimated $3.5 trillion in spending this year, that $80 billion amounts to about a week to 10 days of federal government expenses.

From that perspective, it seems a lot like rearranging deck chairs. The campaign emphasis, so disproportionate to the reality of the spending problem that confronts us, becomes pure theater, part Greek tragedy, part Roman games, stoking the passions of the mob.

In any case, we need to raise revenue somehow, and it's less unjust to raise those taxes from the wealthy than from the middle class or poor.

Jeff,



Why? In California, those in the 38% tax bracket pay more than 50% in income taxes between state and federal and not to mention sales taxes. I don't know how it can be considered just to take away 1/2 of a person's income.

The effective income tax rate on "the rich" is actually around 19-20% and always has been, mostly as a result of deductions. I hardly find 20% an "unjust" level of taxation.

The effective income tax rate in the USA is actually around 19-20% and always has been, mostly as a result of deductions. I hardly find 20% an "unjust" level of taxation.

Hauser's law is the proposition that, in the United States, federal tax revenues since World War II have always been approximately equal to 19.5% of GDP, regardless of wide fluctuations in the marginal tax rate.[1] Historically, since the end of World War II, federal tax receipts as a percentage of gross domestic product averaged 17.9%, with a range from 14.4% to 20.9% between 1946 - 2007.[2]

Imposes a 10.3% tax rate on taxable income over $250,000 but less than $300,000--a percentage increase of 10.6% over current policy of 9.3%. The 10.3% income tax rate is currently only paid by taxpayers with over $1,000,000 in taxable income.[7].
Imposes an 11.3% tax rate on taxable income over $300,000 but less than $500,000--a percentage increase of 21.5% over current policy of 9.3%.
Imposes a 12.3% tax rate on taxable income over $500,000 up to $1,000,000--a percentage increase of 32.26% over current policy of 9.3%.

Imposes a 10.3% tax rate on taxable income over $250,000 but less than $300,000--a percentage increase of 10.6% over current policy of 9.3%. The 10.3% income tax rate is currently only paid by taxpayers with over $1,000,000 in taxable income.[7].
Imposes an 11.3% tax rate on taxable income over $300,000 but less than $500,000--a percentage increase of 21.5% over current policy of 9.3%.
Imposes a 12.3% tax rate on taxable income over $500,000 up to $1,000,000--a percentage increase of 32.26% over current policy of 9.3%.

I think it's a legitimate point. Eighty billion dollars is a lot of money, even as a small percentage (2.6%) of the Federal budget. I don't know about you guys, but my raises these days are about 3%, so it's darn close to that. I know I wouldn't sneeze at a 2.6% raise. In any case, we need to raise revenue somehow, and it's less unjust to raise those taxes from the wealthy than from the middle class or poor.

I have no issues with the Bush tax cuts expiring.

Under prop 30 which just passed, the highest tax rate is 13.3 for people earning over one million. The other tax rates:

I'm not sure what deductions are available to the very rich but even if they're only paying 20%, they are still paying 43% between state and federal in California

By the way, these taxes apply retroactively to January, 2012 which means that if a person planned on a particular tax burden, they are going to get a bit surprise.

Although I would love to make over $250,000 a year and can live quite comfortably on it, it isn't that much when you put the tax burden in there and consider the high cost of living in California. A 1400 sq foot home in my not exactly fantastic neighborhood just sold for close to $600,000.

Despite all these tax burdens, California is near bankrupt.

So much for the theory that higher taxes stimulates the economy.

Do I want to see an increase on middle class and poor families? I don't know, many of them don't pay any taxes at all. I know there are good reasons for that much of the time but it still adds up to the rich bearing the burden and I do tend to think it needs to be spread around more. If I were in the middle class and not dirt poor, I could tighten my belt a little and take on more of my share.

No, no, no; we need to cut spending.

The more people, small businesses and corporations forfeit through taxes the less they have to contribute to a productive economy.

Obama and his ilk don't understand that we cannot have over half the nation on some form of government dole nor can we simply print more scrip when we run low.

I'm all for cutting spending.

But the department of defense, service on the debt, social security, medicare, and medicaid spending ALL BY THEMSELVES cost more money than we take in. So which one do you want to cut by HUNDREDS of millions of dollars?


You act as if the government doesn't spend any money. Every single dollar that goes INTO the government comes OUT of the government. It pays someone's salary...who buys goods and services, which helps the economy. Or it buys a product, which pays someone's salary, who buys goods and services, which helps the economy.


No. You do not understand that we do not have half the nation on some form of government dole.

Is BobC on the government dole? Is Dean on the government dole? No. But they pay no federal income taxes. Heck, aren't your retired and drawing social security? I guess you're on the government dole too, huh?

Medicare and Social Security can be cut effectively by immediately raising the qualification age; with the longer life expectancy those coming on later would still get the same total benefit as those on now.

Buy the way, on your last point; SS and Medicare are not government doles, the government stole that money from us and is now dribbling it back out. The government was also supposed to put those funds in a "lock-box" and invest them to achieve some growth, it chose to steal the money instead and is now being held accountable.

As I said, those of us on SS and medicare are not there by choice, that is not how a dole works, we didn't ask for a handout we are merely trying to get back that which was taken from us. My other pension I earned through negotiation, four decades of hard work and creating that intellectual property for which there is so little regard these days.

It's time you gave some serious thought to real nature of SS and Medicare instead of repeating the leftist propaganda. You're going to be there some day, that is unless you continue to defend those who wish to destroy your financial future.

As for the government workers, we could get rid of over half of them and still have too many

The government doesn't earn money it either steals it from the taxpayers or prints it then wastes it through pork-barrel spending and redistribution to areas in which they have no business interfering; housing, education, welfare and now manufacturing, not to mention the totally wasteful "grants" to support the so-called green environmental movement- the only thing green is the money it wastes.

Jeff,

Lets's not forget, not all contributions to an economy are created equal. Government expenditures come with administrative and opportunity costs and borrowed government spending comes with deficit and debt, interest payments which absorb revenues, inflationary pressures, and depreciation or devaluation.

But it should never be the new normal or become the answer to every problem, because it only creates a much bigger one.

Absolutely. But the assertion parrotted by so many Tea Party nuts is that government money is wasted; it is not. .

...$700 for a toilet seat

Beginning in 1981, President Ronald Reagan began an expansion in the size and capabilities of the United States armed forces, which entailed major new expenditures on weapons procurement. By the mid-1980s, this spending became a scandal when the Project On Government Oversight reported that the Pentagon had vastly overpaid for a wide variety of items, most notoriously paying $435 for a hammer, $600 for a toilet seat.

Way to totally ignore my point. Again, when it is "wasted", it still arrives in someone's pocket. That person spends that money (else why did they get it?), which is no different from a person in the private sector getting that money.

But likewise we cannot say that money in taxes is "wasted" or, as Rush is fond of saying "taken out of the economy." That's just plain false.

I think it's a legitimate point. Eighty billion dollars is a lot of money, even as a small percentage (2.6%) of the Federal budget. I don't know about you guys, but my raises these days are about 3%, so it's darn close to that. I know I wouldn't sneeze at a 2.6% raise. In any case, we need to raise revenue somehow, and it's less unjust to raise those taxes from the wealthy than from the middle class or poor.

I have no issues with the Bush tax cuts expiring.

You act as if the government doesn't spend any money. Every single dollar that goes INTO the government comes OUT of the government. It pays someone's salary...who buys goods and services, which helps the economy. Or it buys a product, which pays someone's salary, who buys goods and services, which helps the economy.

The middle class can afford to pay perhaps a bit more taxes. But the rich can DEFINITELY afford to pay more taxes. It is clearly less unjust to tax the rich more than the middle class, and clearly unjust to tax the poor more.

The simple fact is this:

The Bush tax cuts for the rich on which there was so much angst, energy, and hand wringing from both sides, for and against, amounts to roughly $80 billion dollars.

OH NO! Millionaires will have slightly less millions. I'm heartbroken, really.

Kardinal wrote:
Val wrote:
By the way, these taxes apply retroactively to January, 2012 which means that if a person planned on a particular tax burden, they are going to get a bit surprise.

OH NO! Millionaires will have slightly less millions. I'm heartbroken, really.

Jeff,



The issue is whether to say there is one tax rate and then retroactively raise it and whether that is just. We're not just talking about people with one hundred million, we're also talking about people with 1.2 million. Sure, I'd like to have the money but if you've planned your investments and spending around an expectation of a particular tax rate the it can be an unjust burden to change the game on you. It's a basic issue of fairness, not whether or not you personally care about the people treated this way or whether it's going to break the bank of the people affected.

Jeff,



The issue is whether to say there is one tax rate and then retroactively raise it and whether that is just. We're not just talking about people with one hundred million, we're also talking about people with 1.2 million. Sure, I'd like to have the money but if you've planned your investments and spending around an expectation of a particular tax rate the it can be an unjust burden to change the game on you. It's a basic issue of fairness, not whether or not you personally care about the people treated this way or whether it's going to break the bank of the people affected.

The chancellor also tried to neutralise political controversy about his decision to ditch the 50p top rate, by introducing a clutch of new tax measures aimed at the rich, including a 7% stamp duty rate for properties worth more than £2m, and a cap on the tax allowances top earners can claim.

Osborne said the 50p rate had distorted the economy by encouraging tax avoidance, and cutting it to 45p would only cost the exchequer £100m. "It raises at most a fraction of what we were told, and it may raise nothing at all." He insisted the rich would pay five times more tax as a result of all the measures taken together. However, the Labour leader, Ed Miliband, said the impact of the budget would be that "millions will be paying more while millionaires pay less".

Starbucks is planning to change the way it operates so that it will end up paying corporation tax in the UK.

BBC business editor Robert Peston cited sources close to the coffee shop firm as saying it had been stung by the criticism and was changing its ways.

Despite having almost one-third of the UK coffee shop market, Starbucks has paid corporation tax only once in the past 15 years.

Corporation tax is paid by foreign companies on profits made in the UK.

She said the level of tax taken from multinational firms with large UK operations was "outrageous and an insult to British businesses and individuals who pay their fair share".

Starbucks, for example, sold nearly £400m worth of goods in the UK last year, but paid no corporation tax at all, because it transferred some of the money to a sister company in the Netherlands in the form of royalty payments, bought its coffee beans from Switzerland and paid high interest rates to borrow money from other parts of the business.

Amid all the political and media hoopla about the "fiscal cliff" crisis, there are a few facts that are worth noting.

First of all, despite all the melodrama about raising taxes on "the rich," even if that is done it will scarcely make a dent in the government's financial problems. Raising the tax rates on everybody in the top two percent will not get enough additional tax revenue to run the government for ten days.

And what will the government do to pay for the other 355 days in the year?

All the political angst and moral melodrama about getting "the rich" to pay "their fair share" is part of a big charade. This is not about economics, it is about politics. Taxing "the rich" will produce a drop in the bucket when compared to the staggering and unprecedented deficits of the Obama administration.

No previous administration in the entire history of the nation ever finished the year with a trillion dollar deficit. The Obama administration has done so every single year. Yet political and media discussions of the financial crisis have been focussed overwhelmingly on how to get more tax revenue to pay for past and future spending.

The very catchwords and phrases used by the Obama administration betray how phony this all is. For example, "We are just asking the rich to pay a little more."

This is an insult to our intelligence. The government doesn't "ask" anybody to pay anything. It orders you to pay the taxes they impose and you can go to prison if you don't.

Then there are all the fancy substitute words for plain old spending— words like "stimulus" or "investing in the industries of the future."

By the way, these taxes apply retroactively to January, 2012 which means that if a person planned on a particular tax burden, they are going to get a bit surprise.

The issue is whether to say there is one tax rate and then retroactively raise it and whether that is just.

I'm not sure I understand what you're saying. Are you saying the California hike would have taken place years ago without a tax cut somewhere along the line? Under what administration (state) did this occur under?

December 3, 2012

The President
The White House
1600 Pennsylvania Avenue, Northwest
Washington, DC 20500

Dear Mr. President,

After a status quo election in which both you and the Republican majority in the House were re-elected, the American people rightly expect both parties to come together on a fair middle ground and address the nation’s most pressing challenges.

To that end, shortly after the election, we presented you with a balanced framework for averting the fiscal cliff by coupling spending cuts and reforms with new tax revenue. We then welcomed Secretary Geithner to the Capitol on November 29 with every expectation that he would lay out a similarly reasonable path.

Regrettably, the proposal he outlined on behalf of your Administration contains very little in the way of common ground. The proposal calls for $1.6 trillion in new tax revenue, twice the amount you supported during the campaign. The proposal also includes four times as much tax revenue as spending cuts, in stark contrast to the “balanced approach” on which you campaigned. While administration officials are claiming that this proposal contains 2.5 dollars of spending cuts for each dollar in new revenue, counting as part of this ratio previously enacted savings – as if these were new spending reductions – only confuses the public debate. What’s worse, the modest spending cuts in this offer are cancelled out by the additional ‘stimulus’ measures the Administration is requesting. And, this proposal would remove any and all limits on federal borrowing.

We cannot in good conscience agree to this approach, which is neither balanced nor realistic. If we were to take your Administration’s proposal at face value, then we would counter with the House-passed Budget Resolution. It assumes an overhaul of our tax code with revenue remaining at historically normal levels and proposes structural reforms to preserve and protect the Nation's entitlement programs, ensuring they are sustainable for the long-term rather than continuing to grow out of control. Some of its key reforms include:

The House-passed Budget Resolution assumes enactment of structural Medicare reform that offers future beneficiaries guaranteed coverage options, including a traditional fee-for-service Medicare plan. This proposal is based on recent bipartisan efforts and would provide greater support for the poor and the sick and less support for the wealthy. We achieve these reforms in Medicare without affecting current seniors or those nearing retirement. This would slow the projected explosive spending growth in this program and eventually maintain Medicare spending as a share of the economy at 4.75 percent, thus saving the program for future generations.
The House-passed Budget Resolution reforms Medicaid and provides states with greater flexibility to better deliver health security to beneficiaries, saving the federal government nearly $800 billion over 10 years.
Separate from savings in our proposal for the 2010 health care law, the House-passed Budget Resolution envisions hundreds of billions in savings in other mandatory spending, including reforms to Federal employee compensation and the Supplemental Nutrition Assistance Program.

These reforms are, in our view, absolutely essential to addressing the true drivers of our debt, and we will continue to support and advance them. At the same time, mindful of the status quo election and past exchanges on these questions, we recognize it would be counterproductive to publicly or privately propose entitlement reforms that you and the leaders of your party appear unwilling to support in the near-term.

With the fiscal cliff nearing, our priority remains finding a reasonable solution that can pass both the House and the Senate, and be signed into law in the next couple of weeks. The best way to do this is by learning from and building on the bipartisan discussions that have occurred during this Congress, including the Biden Group, the Joint Select Committee, and our negotiations leading up to the Budget Control Act.

For instance, on November 1 of last year, Erskine Bowles, the co-chair of your debt commission, presented the Joint Select Committee with a middle ground approach that garnered praise from many fiscal watchdogs and nonpartisan experts. He recommended that both parties agree to a balanced package that includes significant spending cuts as well as $800 billion in new revenue.

Notably, the new revenue in the Bowles plan would not be achieved through higher tax rates, which we continue to oppose and will not agree to in order to protect small businesses and our economy. Instead, new revenue would be generated through pro-growth tax reform that closes special-interest loopholes and deductions while lowering rates. On the spending side, the Bowles recommendation would cut more than $900 billion in mandatory spending and another $300 billion in discretionary spending. These cuts would be over and above the spending reductions enacted in the Budget Control Act.

This is by no means an adequate long-term solution, as resolving our long-term fiscal crisis will require fundamental entitlement reform. Indeed, the Bowles plan is exactly the kind of imperfect, but fair middle ground that allows us to avert the fiscal cliff without hurting our economy and destroying jobs. We believe it warrants immediate consideration.

If you are agreeable to this framework, we are ready and eager to begin discussions about how to structure these reforms so that the American people can be confident that these targets will be reached.

Again, the American people expect their leaders to find fair middle ground to address the nation’s most pressing challenges. To achieve that outcome, we respectfully request that you respond to this letter in a timely fashion and hope that you will refrain from any further action that would undermine good-faith efforts to reach a reasonable and equitable agreement in this critical matter.

Sincerely,

John Boehner, Speaker
Eric Cantor, Majority Leader
Kevin McCarthy, Majority Whip
Cathy McMorris Rodgers, Republican Conference Chairman
Dave Camp, Chairman, Committee on Ways and Means
Paul Ryan, Committee on the Budget
Fred Upton, Committee on Energy & Commerce

###

While I'm flattered the Speaker would call something "the Bowles plan," the approach outlined in the letter Speaker Boehner sent to the President does not represent the Simpson-Bowles plan, nor is it the Bowles plan. In my testimony before the Joint Select Committee on Deficit Reduction, I simply took the mid-point of the public offers put forward during the negotiations to demonstrate where I thought a deal could be reached at that time.

The Joint Select Committee failed to reach a deal, and circumstances have changed since then. It is up to negotiators to figure out where the middle ground is today. Every offer put forward brings us closer to a deal, but to reach an agreement, it will be necessary for both sides to move beyond their opening positions and reach agreement on a comprehensive plan which avoids the fiscal cliff and puts the debt on a clear downward path relative to the economy.